Judge Chapman’s judgment is obviously a welcome development for participants in the structured capital markets, particularly those who transact regularly with US counterparties.
This week’s TGIF considers the case of Compton v Ramsay Health Care Australia Pty Ltd [2016] FCAFC 106, where the Court exercised its power to “go behind” a judgment upon which a petitioning creditor relied as proof of a debt that was owed.
WHAT HAPPENED?
The bar for recovering assets that have been dubiously transferred out of an insolvent company may not be as high as one might think.
Background
On 14 June 2016, in its judgment delivered in Great Investments Ltd v Warner [2016] FCAFC 85, the Full Court of the Federal Court of Australia confirmed that a benefit transferred from a company without authority can only be retained by the recipient in very limited circumstances.
Shipping companies world-wide are suffering from depressed freight rates caused by years of weakening demand—particularly from China—as global trade has slowed. The latest casualty is one of the largest to date, South Korea’s Hanjin Shipping (Hanjin), the country's largest shipping firm and the world's seventh-biggest container carrier, which was placed into receivership by a South Korean court on Wednesday after its financiers ended financial support.
This week’s TGIF considers the case of Brandon Industries (Vic) Pty Ltd v Locker Pty Ltd [2016] VSC 373 where the Court dismissed an application to set aside a statutory demand due to the applicant’s failure to establish a genuine dispute or offsetting claim pursuant to section 459H of the Corporations Act 2001 (Cth).
BACKGROUND
The Australian government is working to significantly reform Australia’s current insolvency laws by mid-2017.
The reforms are intended to achieve greater likelihood of business preservation by introducing the flexibility to achieve real turnaround of businesses in crisis.
The proposed changes include:
Any legislation or action which seeks to alter the pari passu distribution of an insolvent company's property amongst its creditors needs to be very carefully and comprehensively considered, and have regard to accrued rights and interests.
This week’s TGIF considers Britax Childcare Pty Ltd, in the matter of Infa Products Pty Ltd v Infa Products Pty Ltd (Administrators Appointed) [2016] FCA 848 which considers setting aside a DOCA and the administrator’s casting vote.
FACTS OF THIS CASE
After complex litigation with Britax, Infa Products lost the case and as a direct consequence, appointed administrators.
What’s insolvency got to do with it….
Times are tough in the Queensland construction industry.
In recent times we have seen the demise of names such as Glezeil, Carmichael Builders, SX Projects, TRAC Construction, Gary Deane Constructions and JM Kelly (Project Builders) Pty Ltd.
Insolvency affects all industries, but, given the hierarchical nature of construction contracts, when a construction company is unable to pay its bills, it can cause devastating results both up and down the contractual line:
In Cato Brand Partners Pty Ltd v Air India Ltd the Supreme Court was required to consider whether or not a foreign company had grounds to challenge an application for a winding up order in circumstances where it had not sought to set aside a statutory demand within the required 21 day period.