The Victorian Court of Appeal recently allowed an appeal against an order staying a proceeding brought by companies in liquidation against their former directors for knowingly assisting breaches of trust allegedly committed by the companies. The Court discussed the principles that operate in such circumstances.
Nicholson Street Pty Ltd (receivers and managers appointed) (in liq) v Letten [2016] VSCA 157
The Supreme Court has confirmed that declarations can be made approving settlement payments and the mere fact that a liquidator has acted on incorrect advice will not preclude a settlement payment being regarded as an expense “properly incurred” for the purposes of s 556(1)(a) of the Corporations Act.
Lewis & Templeton & Warehouse Sales Pty Ltd (in liq) v LG Electronics Australia Pty Ltd & Ors (No 2) [2016] VSC 63
Background
The recent decision of the Federal Court of Australia in Australian Securities and Investments Commission v Sino Australia Oil and Gas Limited (prov liq apptd) [2016] FCA 42 serves as a timely reminder to insolvency practitioners to confirm that their appointment as voluntary administrators has been validly made in accordance with section 436A of the Corporations Act 2001 (Cth) (the Act).
Facts
In brief
In an announcement made on 23 August 2016, the Federal Government has provided insolvency practitioners with a further six months to implement certain provisions of the Insolvency Law Reform Act 2016 (Cth) (Act). The Act is aimed at streamlining registration and disciplinary processes and consolidating conduct and procedural requirements, to reduce costs associated with and improve timeliness of external administrations and ultimately increase creditor returns.
Structure of reforms
Accolade is a very useful illustration of how a court exercises its discretion when a financier's failure to register its security interests properly was inadvertent.
When will a court exercise its discretion to grant an extension of time for the registration of security interests on the Personal Property Securities Register (PPSR)? The NSW Supreme Court has given some guidance in In the matter of Accolade Wines Australia Limited and other companies [2016] NSWSC 1023, specifically regarding:
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.
When serving an application to set aside a statutory demand interstate, the strict modes prescribed by SEPA trump service under the Corporations Act (or any mode of informal effective service which might otherwise suffice). Practitioners forgetting this may face a rather abrupt conclusion to proceedings.
The High Court of Australia has now had the final say in the ongoing saga of the restaurant tenant who leased premises at Crown and was told that if it carried out high quality refurbishments of the premises, then it would be ‘looked after at renewal time’. When it came to the expiry of the term of the lease, the landlord required the tenant to vacate the premises.
Legal principles
The importance of security holders accurately registering their interest on the Personal Property Securities Register (PPSR) to create a valid, enforceable interest is constantly emphasised in commentary and cases. It is accepted that an error in a grantor’s identifier is likely to be fatal to a PPSR registration1, often resulting in a creditor’s unperfected interest vesting in a company upon it entering administration or liquidation. However, a recent decision of the New South Wales Supreme Court illustrates that a defective registration may be cured without losing priority.