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:

On 29 April 2016, the Australian Federal Government (Government) announced three major insolvency law reform proposals in its Improving Bankruptcy and Insolvency Laws Proposal Paper¹ (Proposal). The Government has invited submissions from stakeholders and given this is a rare opportunity to undertake substantial reform, we strongly encourage involvement. 

Summary

The recent New South Wales Supreme Court decision in Re HIH Insurance Ltd (In Liquidation)¹ has potentially significant implications for securities class actions where there are allegations that a listed company has failed to disclose material information to the market and/or engaged in misleading and deceptive conduct causing the company's shares to trade at an inflated price.

The Australian Government is proposing to constrain certain "ipso facto" clauses ‒ a move which could make flip clauses void. The closing date for submissions is Friday 27 May 2016.

How would changes to ipso facto clauses affect securitisation?

This week’s TGIF considers the recent NSW Court of Appeal decision of Commissioner of Taxation of the Commonwealth of Australia v 4 Doonan Street Collinsville Pty Ltd (in liq) [2016] NSWCA 69 in which the Court considered the validity of the Commissioner of Taxation’s treatment of debits and credits in an insolvency context.

FACTS

WHO SHOULD READ THIS

• Industry participants in the construction sector.

THINGS YOU NEED TO KNOW

• The deadline for comments on the Improving Bankruptcy and Insolvency Laws Proposals Paper is 27 May 2016.

WHAT YOU NEED TO DO