On 21 February 2014 the Federal Court handed down its decision in Australian Building Systems Pty Ltd (in liq) v Commissioner of Taxation [2014] FCA 116  with the result that liquidators and receivers and managers cannot be held personally liable for any CGT liability subsequently assessed as due (where funds are remitted in the ordinary course and to secured creditors before the Commissioner of Taxation issues the assessment). 

In brief - Your actions will depend on whether you acknowledge or dispute the debt

If you are contacted by a debt collector, you should be frank about what you plan to do. If you dispute the debt, you should get legal advice as quickly as possible.

Debt collectors don't go away if you ignore them

The recent case of Australian Securities and Investment Commission v Glenn Franklin and Ors VID1359/2013 has raised some interesting issues in respect of disclosure and the acceptance of referrals. The proceeding was ultimately unsuccessful and ASIC were ordered to pay the Defendants' costs.

Background

The case centred around the collapse of a large construction company which operated along the east coast. Walton Construction Pty Ltd headed operations in Victoria and New South Wales and Walton Construction (QLD) Pty Ltd headed operations in Queensland.

The decision of the Queensland Supreme Court (Court) in International Cat Manufacturing Pty Ltd (in liq) & Anor v Rodrick & Ors [2013] QSC 307 is a reminder that liquidators who commence proceedings may be personally liable for costs of the proceeding where they are unsuccessful in their claim.

FACTS

In brief - Court sets aside DOCA in Helenic v Retail Adventures

The NSW Supreme Court has recently set aside a deed of company arrangement (DOCA) on the basis that it was prejudicial to creditors who voted against it. The court appointed liquidators to the company.

Declaration of interest: CBP Lawyers acted for the plaintiffs in the case discussed in this article and also represent a large number of unsecured creditors of Retail Adventures Pty Ltd (Administrators Appointed).

The Implications of the Willmott Growers Decision

On 4 December 2013 the High Court handed down its decision in Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers Appointed (In Liquidation)) [2013] HCA 51 (Willmott Growers case), clarifying the scope of a liquidator’s statutory power of disclaimer.

The recent Federal Court decision of ASIC & Franklin & Ors [2014] FCA 68 represents, respectfully, a noteworthy exercise by the Court in applying the law in a commercial common sense manner.

Justice Davies was asked to consider ASIC’s application for disqualification of the Liquidators of Walton Construction Pty Ltd (in liq) and Walton Construction (Qld) Pty Ltd (in liq) (the Companies). The Liquidators were appointed the Administrators of the company having been referred to the directors of the Companies by Mawson Group.

In summary

The recent case of Australian Securities and Investment Commission (ASIC) v Franklin (liquidator), in the matter of Walton Construction Pty Ltd (in liq) [2014] FCA 68 involved an action brought by the ASIC in order to remove the liquidators from the companies based upon a lack of independence and a breach of the Corporations Act 2001 (Cth) (Act) through an alleged deficient Declaration of Relevant Relationships (DIRRI).

It goes without saying that it is important for an insolvency practitioner to be independent and to be seen to be independent when accepting an appointment or continuing to act in an existing appointment. The recent Federal Court decision of ASIC v Franklin [2014] FCA 68 provides some welcome guidance on what this means in practice and also on the contents of a declaration of independence, relevant relationships and indemnities (commonly known as a “DIRRI”).

FACTS

The two year transitional period under the Personal Property Securities Act 2009 (PPSA) ends on 31 January 2014.  After this date, any remaining transitional security interests (TSIs) that have not been registered on the Personal Property Securities Register (PPSR) will no longer have their pre-PPSA priority, which could result in a secured party losing priority to other secured creditors or losing its interest in the secured property altogether if the grantor becomes bankrupt (if an individual) or is placed into administration or liquidation (if a company).