Since BP Australia Pty Ltd v Brown, there has been a practice of Courts across Australia granting "shelf orders", whereby time for voidable transaction recovery actions by a Liquidator under section 588FF is extended "at large".  The Court's power to grant these "shelf orders", however, is to be scrutinised by the High Court in December 2014, in the course of the Octaviar group liquidation.

In brief: The Full Federal Court has held that a liquidator has no obligation to retain monies on account of tax until a notice of assessment has been issued. While the decision is a win for taxpayers (and creditors of insolvent entities), it remains to be seen how the Commissioner of Taxation will respond. Partner Katrina Parkyn (view CV), Senior Associate Joanne Langford and Associate Jay Prasad report on the decision.

On 25 July 2014 and 17 September 2014 respectively, Justice Brereton of the Supreme Court of NSW delivered two related judgments in Re AAA Financial Intelligence Ltd (in liquidation) andRe AAA Financial Intelligence Ltd (in liquidation) (No 2). The decisions deal with the evergreen topic of Liquidator remuneration and expenses.

Importantly, in fixing the Liquidators' remuneration, Justice Brereton adopted a "value" focussed approach, and discussed the relevance of considering matters beyond simply time spent multiplied by fixed hourly rates. 

A recent decision of the Full Federal Court gives liquidators comfort that they are not required to set money aside to meet the future tax obligations of a company until those obligations have been assessed by the Tax Office. Although liquidators must retain money 'sufficient to pay tax which is or will become due', this obligation only applies to tax liabilities that have been assessed and are presently payable or payable in the future, not to liabilities that might be created by future assessments.

With Commonwealth funding to Medicare Locals ceasing on 30 June 2015, now is the time for Boards of Medicare Locals to ensure that they are, and remain, solvent, now that a substantial part of their revenue flow is being terminated.

A recent decision of the Federal Court of Australia demonstrates the importance of professional insolvency service providers reviewing their work processes to ensure efficiency and cost-effectiveness, and of being diligent in the recording and claiming of costs.

In February 2014, we issued an alert concerning our clients' successful outcome in Australian Building Systems v Commissioner of Taxation [2014] FCA 116.  That matter concerned important considerations around a liquidator's liability for a capital gain made during the liquidation.  Today, the Full Federal Court unanimously dismissed an appeal brought by theCommissioner of Taxation (Commissioner of Taxation v Australian Building Systems Pty Ltd (in Iiq) [2014] FCAFC 133).

On 8 October 2014 the Full Court of the Federal Court delivered judgment in favour of the liquidators in the much anticipated Australian Building Systems appeal¹ (Appeal).

Barring the Commission of Taxation seeking special leave to appeal to the High Court, liquidators (and other trustees, including receivers and managers) can now take comfort that they are not personally liable for failing to hold sufficient funds for any anticipated CGT liability, in the absence of a notice of assessment.

Achieving sales growth is a significant challenge for many Australian businesses. Even if new customers can be found, an inability to collect and hold onto payments can pose another obstacle to growth.

To survive and prosper businesses must plan, and implement, strategies for sustained profitability. It is not enough to simply achieve fantastic sales results and get the money in, businesses must also anticipate, and protect against, the risk that payments received from customers may be clawed back if a liquidator is later appointed to the customer.

In Rathner in his capacity as Official Liquidator of Kalimand Pty Ltd (in liq) v Hawthorn [2014] FCA 1067, the Federal Court considered the elements of voidable transactions under Pt 5.7B of the Corporations Act, and the meaning of becoming insolvent “because of” entering into a transaction.