This week’s TGIF considers the recent decision of the Federal Court which concerned the proper distribution of sale proceeds and whether those proceeds comprised part of the “property of the company”
WHAT HAPPENED?
Bamboo Direct Pty Limited (Bamboo), a company engaged in the business of purchasing and importing solar hot water heaters and solar panels, was placed into liquidation on 11 July 2012.
Key Points:
Although they should always keep time-frames very much in mind, the decision in BKA Practice Co Pty Ltd gives liquidators greater scope to find all possible time-frames in which they have to work.
CGU Insurance Limited v Blakeley [2016] HCA 2
Background
The High Court recently heard an appeal brought by CGU Insurance from a decision in the Supreme Court of Victoria, challenging a declaration that CGU was liable to indemnify Akron Roads Pty Ltd (in liquidation) (“Akron”) in interrelated proceedings.
Victorian Supreme Court rules that the appointment of an administrator was invalid, void and of no effect because the directors did not genuinely believe the company was insolvent and appointed the administrator for an improper purpose.
BACKGROUND
The decision in Re Forge Group Construction Pty Ltd (in liq) (Receivers and Managers appointed); ex parte Jones [No 2] [2016] WASC 87 confirms that while some communications between liquidators, receivers and their respective solicitors can be privileged, it is not necessarily always the case. Critical factors include the purpose of the communication in question and whether there is a sufficient commonality of interest between liquidators and receivers in relation to the communication’s subject matter.
Facts
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
A party to arbitration or court proceedings in Australia can obtain a freezing order in advance of obtaining a domestic court judgment or arbitration award, in prescribed circumstances. In PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2015]1 the High Court of Australia has confirmed that Australian courts have the same power to grant freezing orders prior to a judgment or award being obtained in respect of proceedings commenced outside of Australia, provided that judgment or award would be enforceable in Australia.
In a decision handed down on 11 February 2016, the High Court has confirmed that the State Supreme Courts have jurisdiction to grant relief to plaintiffs seeking to join insurers of insolvent or potentially insolvent defendants, and a declaration that the insurer is liable to indemnify the defendant.
Introduction
In the recent case of Queensland Mining Corporation Ltd v Butmall Pty Ltd (in liq), the Court held that the liquidators' relationship with a major creditor of the company in liquidation (Butmall) did not per se amount to a conflict of interest.
Butmall applied to have its liquidators removed as they were the auditors of its major creditor (QMC), against whom Butmall purported to have considerable counterclaims.
In March 2013, four portable gas turbines worth about AU$50m had been leased to Forge Group Power Pty Ltd (Forge) by GE International Inc (GE) as lessor. In February 2014 and March 2014 Forge was placed in administration and liquidation respectively.