The issue of how causation can be established has been one significant debate in Australian securities class actions involving alleged breaches of the Corporations Act by corporations. It has been unresolved whether shareholders must prove individual reliance on the contravening conduct of companies, or if the conduct affects the market price of shares purchased and/or sold by shareholders is sufficient.

In Hussain v CSR Building Products Limited; In the matter of FPJ Group Pty Ltd (in liquidation) the Federal Court held that a retention of title (ROT) clause secures the purchase price of the goods it covers, and that payment of that price will not be an unfair preference since the creditor has not received payment of an “unsecured debt” within the meaning of section 588FA of the Corporations Act 2001 (Cth).

Major insolvency reform: Getting the (ipso) factos straight

In brief

In brief

This week’s TGIF examines the NSW Supreme Court decision In the Matter of Kevin Jacobsen Pty Limited (in liq) [2016] NSWSC 538 which considered a challenge to an application under s 477(2B) to assign a cause of action.

WHAT HAPPENED?

On 10 August 2015, the liquidators of Kevin Jacobsen Pty Limited (in liquidation) (KJPL) applied to the NSW Supreme Court for:

Insolvency reform: let’s not forget about the scheme of arrangement regime (again!)

In brief

On 23 February 2016, Justice Brereton of the Supreme Court of New South Wales handed down a decision In the matter ofIndependent Contractor Services (Aust) Pty Limited ACN 119 186 971(in liquidation) (No 2) that may significantly impact the economics of winding up of corporate trustees and the return to priority creditors such as employees.

In summary, the Court held that:

Background

On 7 December 2015, the Australian Government released its "National Innovation and Science Agenda" ("Agenda"). In the Agenda, the Government outlined its intention to make three significant reforms to Australia's insolvency laws, adopting the recommendations of the Productivity Commission ("Commission") in its report, "Business Set-Up, Transfer and Closure" ("Report"), released on the same day as the Agenda:

Introduction

In most cases, the precondition for the appointment of a liquidator and the winding up of a company by a court is that a company is insolvent. However, in some cases courts will make these orders in the context of a shareholders dispute where there is a management deadlock or a breakdown in trust and confidence between shareholders. Additionally, a court may make these orders where there has been serious fraud or mismanagement in the conduct of a company’s affairs.

Relevant law

This week’s TGIF considers In the matter of Banksia Securities Limited (in liquidation) (receivers and managers appointed)[2016] NSWSC 357 in which the Court uses its broad remedial powers to appoint special purpose receivers.


BACKGROUND