With continuing market volatility a number of companies remain under financial pressure. Businesses or individuals receiving payments from companies that might be financially distressed should be aware of the ability of a liquidator to apply to a court under the Corporations Act 2001 (Cth) (Corporations Act) to recover payments made to creditors in the six months prior to the appointment of a liquidator/administrator on the grounds the payment constituted an “unfair preference”.
Quick Recap on the Relevant Provisions
The Implications of the Willmott Growers Decision
On 4 December 2013 the High Court handed down its decision in Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers Appointed (In Liquidation)) [2013] HCA 51 (Willmott Growers case), clarifying the scope of a liquidator’s statutory power of disclaimer.
General corporate
ASIC reports on corporate insolvencies 2012–2013
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.
The boundary between work life and private life is becoming less clear. In last month's Workplace View, we reported on a FIFO worker who successfully claimed workers' compensation for an injury he sustained while sleeping in employer-provided accommodation. This month, the Federal Court has upheld a workers' compensation claim by a Commonwealth worker whose 'private activities' with a 'male friend' in a motel room caused a glass light fitting above the bed to fall and strike her on the nose and mouth leaving her with physical and psychological injuries.
In New South Wales (NSW), unlike in Victoria, claimants in liquidation have been able to make claims under Security of Payments Acts (SOPA). This has been recently reaffirmed in the case of Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In Liquidation) [2019] NSWCA 11 (Seymour), where the court doubled-down on this position and further explained why the NSW position differs from the position taken by the Victorian Court of Appeal in the infamous Faade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247 (Faade).
Without enforcement, an arbitration process and subsequent awards can be a pointless exercise. Freezing orders are an important tool in any dispute and a recent decision by the Supreme Court of Western Australia suggests that courts are willing to protect the enforceability of future awards.
In the recent case of Cash Generator Limited v Fortune and others [2018] EWHC 674 (Ch), the Court determined that non-compliance with the deemed consent procedure for nominating liquidators did not invalidate their appointment. The case provides a useful summary on the relatively new provisions governing the deemed consent procedure and welcome relief to Insolvency Practitioners (“IPs”) that a failure to fully comply with such provisions will not necessarily invalidate their appointment.
Brief facts and arguments
Australia’s corporate insolvency regime has undergone significant reform with the passing of the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 (the Bill) through both houses of parliament.
With effect from the commencement of the new financial year in July 2017, the Australian federal and state governments implemented a range of legal and regulatory changes, which could affect entities undertaking or contemplating investments in Australian land, companies or businesses or who are seeking to establish operations in Australia. We have summarised four of these key changes below.