Property acquired by a bankrupt after the date of bankruptcy becomes property that is divisible amongst the bankrupts’ creditors. However, case law supports the conclusion that after-acquired income remains vested in the bankrupt. The question then becomes: what happens to property that is purchased by the bankrupt with after-acquired income? This question was considered in the recent case of De Santis v Aravanis [2014] FCA 1243.

Background 

The government has today announced that it is scrapping its plans to end the insolvency exception to the Jackson reforms from April this year (as we had reported here).

There are circumstances where a liquidator may approach the Court concerned that their position in future proceedings may be weakened if the matters they put before the Court in current proceedings are revealed. In an appropriate case the Court will make a non-publication order to prevent prejudice to the proper administration of justice. The recent case of Australian Securities and Investment Commission v Piggott Wood & Baker (a firm) [2015] FCA 18 examined in what circumstances a non-publication order is necessary.

BACKGROUND

Need to know

In a first for the US and Australian markets, the Buccaneer Energy group of companies successfully had bankruptcy plans approved by the US Bankruptcy Court for both US and Australian incorporated debtor companies. 

In October, we issued an Insolvency Newsflash with respect to the decision in Re: Joe & Joe Developments Pty Ltd (subject to a Deed of Company Arrangement) [2014] NSWSC 1444. On 1 December 2014, a further judgement was handed down by the Supreme Court of New South Wales (Re: Joe & Joe Developments Pty Ltd (subject to a Deed of Company Arrangement) [2014] NSWSC 1703), which considered additional matters and included orders for costs.

The decision In the matter of CGH Engineering Pty Ltd [2014] NSWSC 1132 handed down by Justice Brereton early in 2014 required the Court to answer an interesting and novel question - is the statutory derivative action available during a voluntary administration?

The statutory derivative action

The process of repossession will involve complex issues of fact and law. Each one is different depending upon the jurisdiction involved, the approach of the operator and the attitude of the relevant authorities.

Information and planning

The Senate has announced a national inquiry into insolvency in the Australian construction industry (Inquiry).^[1] 

A recent decision by Justice Beech of the Western Australian Supreme Court in Hamersley Iron Pty Ltd v James [2015] WASC 10[1] has considered the issue of whether an adjudication determination made under the Construction Contracts Act 2004 (WA) (the Construction Contracts Act) can be enforced by an insolvent company.

SUMMARY

The FSI Report has recommended that Government should consult with relevant stakeholders to consider the introduction of 'safe harbour' provisions for directors engaged in restructuring efforts, and the suspension of ipso facto clauses during a restructuring.

Minter Ellison supports reform in both of these areas.

Australia's insolvent trading laws are among the strictest of any country. A director may become personally liable for new debts that are incurred by the company, if the director has reason to 'suspect' insolvency.