The recent Supreme Court of New South Wales decision of AMC Commercial Cleaning (NSW) Pty Ltd v Stephen Keith Coade & Anor; Rockcliffs Solicitors & IP Lawyers v Schon Condon as liquidator of AMC Commercial Cleaning (NSW) (No 2) [2013] NSWSC 332 confirms that a liquidator may be personally liable to pay costs where the liquidator initiates proceedings to claim funds for the company in liquidation.

On 19 April 2013, the Federal Court of Australia handed down its judgment in Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356. The Court enforced a foreign award against a company in liquidation, in the latest evidence of Australia’s pro-arbitration environment. 

Background

The recent decision of Oswal, in the matter of Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Carson, McEvoy and Theobald (Receivers and Managers) (No 3) [2013] FCA 357 confirms that the Federal Court will not order an inquiry into the alleged misconduct of receivers and managers where the relevant events are matters of commercial judgment.

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.

In the recent decision of Re Sports Alive Pty Ltd (in liquidation) [2013] VSC 69, the Supreme Court of Victoria dealt with questions referred to it by a liquidator in respect of segregated bank accounts which might either be available for costs and the general body of creditors or alternatively only for beneficiaries on whose behalf the trustee should have held funds.  It was accepted that the determination was essentially a question of fact, and in the face of ambiguous facts, the Court determined that the onus was on the beneficiaries and not the liquidator. 

Generally speaking, other than in limited prescribed situations, an insolvency practitioner can only be removed by Court order. Often applications are made for the removal because of a perceived bias, however these are not always successful, as was seen in Cote v Devine [2013] WASC 79, handed down last week. New reforms allowing creditors to resolve to remove insolvency practitioners without recourse to the Court have the potential to significantly affect this.

The recent New South Wales Supreme Court decision In re MF Global Australia Ltd (in liq) No 2 [2012] NSWSC 1426 confirmed that the remuneration, costs and expenses incurred by liquidators in preserving, recovering and realising trust assets should be paid out of the trust property generally, rather than being restricted to assets held on trust for the benefit of the company itself.

The recent Federal Court of Australia (Court) decision in CBA Corporate Services (NSW) Pty Ltd, in the matter of ZYX Learning Centres Ltd (receivers and managers appointed) (in liq) v Walker [2013] FCA 243 confirms that liquidators owe a heavy duty of disclosure to the court and that the materiality of facts to be disclosed is to be assessed on a case by case basis.

This is the second case in which the New South Wales Supreme Court has granted an extension of time for registration of a security interest on the Personal Property Securities Register where the delay is accidental or due to inadvertence.  However, the extension in this case was conditional firstly, by preserving the priority of another security interest which had been registered in the meantime and secondly, because there was insufficient evidence of the financial position of the grantor to establish that an extension was unlikely to prejudice other creditors or shareholde

In the current economic climate, contactor insolvency is an increasing concern for all participants in the construction industry. 

The issue is currently receiving close attention from the NSW Government who commissioned an independent report following a spate of contractor insolvency events in 2012 (including Reed Constructions Australia Pty Ltd, St Hilliers Construction Pty Ltd, Southern Cross Constructions (NSW) Pty Ltd and Hastie Group Limited).