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).

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.

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 New South Wales Supreme Court (Court) decision in In re MF Global Australia Ltd (in liq) No 2 [2012] NSWSC 1426 (23 November 2012) confirms that liquidators who properly incur costs and expenses in seeking court directions regarding the distribution of trust property and, in recovering such property, will generally be able to recover their relevant remuneration, costs and expenses from that trust property.