In Saraceni v ASIC [2013] FCAFC 42 the Full Court of the Federal Court of Australia confirmed that it is not necessary for ASIC to provide potential examinees with an opportunity to be heard prior to authorising receivers to conduct examinations under s596A of the Corporations Act.

FACTS

Later this year the High Court will hear an appeal from the decision of the Victorian Court of Appeal in Re Willmott Forests Limited (Receivers and Managers appointed) (in liquidation) [2012] VSCA 202.

The decisions of the Court of Appeal and the trial judge were considered in our earlier alert that can be accessed by clicking here.

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

The liquidators of Lehman Brothers Australia are appealing a landmark Federal Court decision that found it liable for losses suffered by a number of local councils and charity groups.

It is well established that if a trustee company goes into liquidation then:

The decision of Fielding as Liquidator of Lyngray Developments Pty Ltd (In Liquidation) v Dushas & Anor [2013] QCA55, overturned a Judgment at first instance where it was held that various payments made by a company to a close associate of a director of a company were not unreasonable director related transactions pursuant to Section 588 FE(6).

The Court of Appeal held that the payments did constitute unreasonable director related transactions and this decision provides guidance as to:

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.