It is quite a thing for the law to remove from owners the rights normally associated with ownership and to confer them on receivers.
Which is why, although receivers are allowed considerable discretion in the exercise of their duties, they are also subject to oversight by the courts.
So how much freedom of manoeuvre do they have, and when will the court intervene? We look at a recent decision1 in the Australian Federal Court and consider its relevance for New Zealand insolvency practitioners.
Upon appointment, a liquidator will generally exercise control of as much of the company’s property as is available, so that it can be realised for the benefit of creditors. However, in some cases, a liquidator may not wish to retain certain property if it is unlikely that such property will provide a return to the liquidation.
The importance of notifications to potential defendants and directors of the insolvent company
The decision in Re Octaviar Administration Pty Ltd (in liq) [2013] NSWSC 786 highlights two key issues for insolvency practitioners:
The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 (Regulations) to amend the structure of UK annual reports have been published and laid before Parliament.
The Personal Property Securities Act 2009 (Cth) (PPSA) came into effect on 30 January 2012 and has introduced major changes for businesses that lease or hire personal property. If you lease or hire personal property it is vital that you understand how the PPSA affects your business, including what additional steps you need to take to protect your property and the consequences for not doing so, especially as the PPSA’s transitional provisions will end shortly.
What does the PPSA mean for your business?
The recent Australian Federal Court case of Neeat Holdings (in liq) [2013] FCA 61 considered the issue of whether the liquidator of a trustee company should be permitted to sell trust assets notwithstanding the appointment of a new trustee in substitution for the insolvent trustee company.
The Federal Court found that where a trust deed provides for the cessation of a corporate trustee upon the appointment of an administrator or upon a resolution for its liquidation (and there is no replacement trustee appointed), the corporate trustee retains its right of indemnity and continues as bare trustee but does not have the power to sell the trust assets. However, the Court was persuaded to grant relief to the liquidators of the trustee (who had sold trust assets) on the basis they had not been advised by their solicitors of the disqualification clause and they com
In the recent case MSI (Holdings) Pty Ltd v Mainstreet International Group Ltd, the Queensland Supreme Court confirmed that receivers of a company in liquidation can commence legal proceedings in the name of the company without leave of the court, when those proceedings relate to the recovery of secured property.
On the occurrence of bankruptcy, the trustee must take immediate possession or control of the bankrupt’s property, as that property is now “available” to the trustee for the benefit of creditors generally and vests in the trustee for that purpose. However, a bankrupt may not always co-operate with his or her trustee and will often refuse to deliver up property to the trustee or even allow the trustee on to the premises where the property is held.
A relevant example
The recent decision of Modcol Pty Ltd v National Buildplan Group Pty Ltd [1] addressed whether leave should be granted to a subcontractor to allow it to commence proceedings against a contractor in administration in respect of the subcontractor's rights under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the SOP Act).