The Court will closely examine the relevant transactions involving the accounts and form a view – which may be an impressionistic one – as to the likely extent of the interest of each client (or each client group) in those accounts.

Particularly in smaller external administrations, the court will not blindly accept time-based remuneration as reflecting the value of the work, but will consider the proportionality of the remuneration.

In a number of recent judgments, the courts appear to be favouring considerations of proportionality coupled with an assessment of the realisations achieved when assessing application for the approval of remuneration for external administrators.

There's been a drop-off, but Peter Bowden says things might be about to change.

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Key Points:

The NSW Supreme Court says it can provide directions on an administrator's commercial decision on the basis of the liability assumed by administrators and their partners.

On 17 October 2012, Nine Entertainment announced that it had reached an agreement with representatives of its senior and junior lenders with respect to a restructuring of its financing arrangements. Prior to the announcement, recent business press had been dominated by reports of Nine Entertainment's potential insolvency.

Key Points: The fact that you're a very big company doesn't mean you needn't follow the legal rules for the execution of documents.

Background

A large insurance company claimed to be a creditor of Ungul, a property developer. Ungul was in voluntary administration.

A meeting of Ungul's creditors was called for 11 June. The insurance company's solicitors contacted the administrator and said that:

The abolition of the "peak indebtedness" rule will complicate liquidators' tasks, not least its adverse effect on pursuing preferences where it's unclear what forms the single transaction.

The equitable doctrine of marshalling can protect the security interests of subordinate secured creditors when a debtor becomes insolvent.

Marshalling is a neglected tool in the insolvency toolbox, but it can play an important role in protecting the security interests of subordinate secured creditors.

When faced with multiple class action threats, there is little downside in a company giving consideration to a creditors’ scheme of arrangement to achieve a quicker and cheaper resolution of the underlying claims.

In handing over any documents in litigation or Court process, you must assess whether or not the documents have tax relevance.