This week’s TGIF examines the decision of the Supreme Court of New South Wales in In the matter of Jana Pty Ltd [2022] NSWSC 112, considering whether a ‘genuine dispute’ exists  in relation to a debt claimed in a statutory demand where the debt arises from a poorly drafted deed.

Key Takeaways

Mr Badcock (the Respondent) was an undischarged bankrupt, and Mr Ambrose (the Applicant) was the trustee of his bankruptcy. The key issue for determination was the definition of property under the Bankruptcy Act, and whether the moving of monies into an interesting-bearing account by the Respondent was sufficient to change the character of income to after-acquired property which would vest in the Trustee’s Estate.

Litigation funding can play an important role in allowing liquidators to recover debts on behalf of liquidated companies, where there may be a real prospect of success in recovery proceedings but where obstacles such as funding or security for costs may present themselves.

ASIC v King [2021] FCA 1610

Background

This week’s TGIF considers Thorn (liquidator), in the matter of South Townsville Developments Pty Ltd (in liq) [2022] FCA 143 in which a liquidator sought approval to enter agreements to pursue litigation and suppression orders to protect the disclosure of commercially sensitive details.

Key Takeaways

In the 1500s, debtors in England would avoid paying their debts by transferring property to friends or family as a gift or for undervalue, move to a sanctuary such as church land, wait for their creditors to exhaust their efforts or come to a favourable settlement of the debt, and then return and take a re-transfer of the property. This was a fraud on the creditors.

To prevent this mischief, in 1571, Parliament enacted the Fraudulent Conveyances Act (13 Eliz I, c 5), known as the Statute of 13 Elizabeth, and in Australia, as the Elizabethan Statute. It provided:

From 1 April 2021, the Bankruptcy Regulations 1996 (Cth) (Former Regulations) were replaced by the Bankruptcy Regulations 2021 (Cth) (Bankruptcy Regulations). Whilst the various amendments introduced by the new Bankruptcy Regulations have been largely represented as minor and administrative in nature, there is one critical amendment concerning the method for service of bankruptcy notices.

What is a bankruptcy notice?

The Insolvency Practice Rules (Corporations) Amendment (Virtual Meetings and Electronic Communications) Rules 2022 (the Rules) came into effect on 11 February 2022.

The Rules are made under the Corporations Act 2001 (Cth).

This week’s TGIF considers Re C88 Project Pty Ltd [2022] NSWSC 126, a New South Wales Supreme Court case which provides guidance on the effect of omitting prescribed information, and including claims for disputed judgment interest, on the validity a statutory demand.

Key Takeaways

This week’s TGIF considers the recent High Court decision in Walton v ACN 004 410 833 Limited (formerly Arrium Limited) (in liquidation) [2022] HCA 3, which provides guidance on the range of potential purposes for which an examination of company officers may be legitimately pursued by ‘eligible applicants’.

Key Takeaways