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:

In the recent decision of MSI (Holdings) Pty Ltd v Mainstreet International Group Ltd [2013] QCA 27, the Court of Appeal considered the meaning and application of sections 471B and 471C of the Corporations Act.

BACKGROUND

The decision involved receivers who were appointed to MSI (Holdings) Pty Ltd (receivers appointed) (in liquidation) (MSI) by Central Coast Projects Pty Ltd (Central Coast) pursuant to a charge it held over all property, assets and rights of MSI.

Justice Jacobson's unwillingness to depart from the interests of the majority in relation to Nine Entertainment should give parties confidence that Schemes remain an effective way to effect debt for equity swaps or similar transactions.

The Financial Reporting Council (FRC) and institutional bodies have published the following guidance in relation to corporate governance and directors' remuneration in the last few months.

Several issues of far-reaching significance in the world of restructuring and insolvency will be decided by the courts, and by Parliament, this year. 

Some have yet to surface but others are already in the pipeline.

We look at what we consider to be the “top five”.

Litigation funding

Statutory demands are a quick and convenient way to prove a debtor company’s insolvency. But they’re sensitive creatures. There seems to be an endless list of potential defects to make the demand challenge-worthy.

Luckily for creditors, a recent decision of the WA Court of Appeal means there is one less way for a demand to fail.

The loan and the demand

Garuda Aviation is a small WA operator that borrowed $27 million from CBA to buy a plane. The loan was secured by a mortgage over the plane.

The Full Court of the Federal Court of Australia recently affirmed the decision of Justice Barker in disallowing Mr Oswal, the director of Burrup Holdings Limited (BHL) and Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) (BFPL) access to certain books and records of the companies.