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

There is a plethora of Australian legislation which sheets home personal liability to directors and officers.

Below are some reminders of traps for directors and officers for transactions that might be undertaken in the usual course of a director or officer’s normal arrangements.

Trap 1: Super re-contribution

Some advisors propose, as a strategy for limiting superannuation death benefits tax, withdrawing superannuation balances and re-contributing that amount into super as a non-concessional tax-free contribution.

MSI (Holdings) Pty Ltd (Receivers Appointed) (in Liquidation) ACN 120 419 409 (MSI) against Mainstreet International Group Limited (Mainstreet) ACN 120 747 124.

The appeal was brought by the Receivers, who sought to recover a debt for the secured creditor once a liquidator had been appointed to MSI.

The Court of Appeal handed down the decision recently in favour of MSI.

Facts of the case

Introduction

In the hire industry, it is common for hirers to incur significant exposure on customer accounts where credit is extended in circumstances where security is not provided.  In a difficult economic climate, ensuring your customers promptly pay for hired goods, or pay at all, can be challenging. 

A recent analysis^[1] has found that:

The Federal Magistrates Court of Australia decision of Dubow v Official Receiver & Anor [2013] FMCA 217 confirms that the Court’s discretion to annul bankruptcy is limited.  Even if the discretion is enlivened, it appears that the Court will be reluctant to exercise its discretion where the bankruptcy has come about by the bankrupt’s own petition.

ASIC suspended the Australian Financial Services Licence of LM Investment Management Limited for two years this week for being an externally managed vehicle (voluntary administrators were appointed in March 2013). The practical effect of the suspension will mean that LM Investment Management won’t continue managing its nine funds. ASIC is also investigating the complex structure of the business and their related party transactions with the principal, Peter Drake.

Quite often we are asked to advise upon issues that arise in the context of creditor’s meetings. The following is a summary of commonly asked questions and commentary on the legal position, including a discussion of recent cases that have looked at each issue.

1. Can a 2nd creditor’s meeting be extended beyond the 45 day statutory period?

Case Note: Re Cardinia Nominees Pty Ltd [2013] NSWSC 32

Facts of the case

Cardinia Nominees Pty Ltd (Cardinia) agreed to lend Inika Pty Ltd (Inika) the sum of $750,000, in exchange for the issue of convertible bonds to Cardinia. The loan was secured by a charge in favour of Cardinia over the whole of Inika’s assets.

A Supreme Court decision has delivered a hefty blow to holders of HIH Holdings (NZ) convertible notes leaving them with little hope of recovering any of their investment.

The NSW Government has accepted some of the key recommendations of the Recommendations of the Independent Inquiry in Construction Industry Insolvency in NSW, including the introduction of bonds. We know that the Government will: