This week’s TGIF considers a recent Federal Court decision in which relief was sought under section 588FM of the Corporations Act to ensure a security interest perfected after the ‘critical time’ did not automatically vest.

What happened?

On 7 April 2016, administrators were appointed to OneSteel. OneSteel, a member of the Arrium Group of Companies, subsequently entered into a deed of company arrangement.

This week’s TGIF considers Clive Palmer’s recent challenges to the constitutionality of the Court’s power under the Corporations Act to issue examination summonses.

What happened?

On 18 January 2016, administrators were appointed to Queensland Nickel Pty Ltd (QNI) pursuant to s 436A of the Corporations Act 2001 (Act). The creditors subsequently resolved that QNI be voluntarily wound up and the administrators were appointed as liquidators (the General Purpose Liquidators).

Victorian Supreme Court rules that the appointment of an administrator was invalid, void and of no effect because the directors did not genuinely believe the company was insolvent and appointed the administrator for an improper purpose.  

BACKGROUND

Hudson v Signalla [2015] FCAFC 140 confirms that leave of the court is not required under s58(3) Bankruptcy Act 1966 (Cth) to sue a former bankrupt in respect of what was a provable debt in the bankruptcy, after an annulment of the bankruptcy by way of a composition under ss73 and 74 of the Bankrupcty Act.

BACKGROUND

A bankrupt had his bankruptcy annulled by way of presentation of a composition that was accepted by participating creditors (Composition). 

This week’s TGIF examines a High Court decision which confirmed the power of a court under s 588FF(3) of the Corporations Act to extend the time for the commencement of voidable transaction proceedings, without identifying the particular transaction or transactions to which the extension would apply.

In Sharpe v WH Bailey & Sons Pty Ltd [2014] FCA 921, Justice Gleeson found that the Farm Debt Mediation Act 1994 (NSW) (FDM Act) did not operate to prevent an individual from pursuing their rights under the Bankruptcy Act1966 (Cth), even though those rights may have been related to a farm mortgage.  In doing so, Justice Gleeson confirmed that the Bankruptcy Act1966 (Cth) will have priority over the FDM Act where the requirements of section 5 of the FDM Act are met.

FACTS

In DSG Holdings Australia Pty Ltd v Helenic Pty Ltd [2014] NSWCA 96, the Court of Appeal considered the meaning of the “interests of the creditors as a whole” under section 600A of the Corporations Actand the circumstances in which the Court will intervene to set aside or impose conditions on resolutions passed at creditors meetings.

BACKGROUND

In its recent judgment of Morgan,In the matter of Brighton Hall Securities Pty Ltd (in liquidation) [2013] FCA 970, the Federal Court of Australia determined that a liquidator is entitled to retain certain remuneration and other expenses from the proceeds of a claim under a professional indemnity insurance policy in preference to claimants, who would otherwise have a statutory priority under section 562 of the Corporations Act.

BACKGROUND

This week’s TGIF considers the latest of two recent Federal Court decisions approving the compromise of debts owed to a company in liquidation, on the application of liquidators pursuant to section 477(2A) of the Corporations Act 2001 (Cth) and on confidential terms.

Key takeaways

This week's TGIF considers In the matter of Intellicomms Pty Ltd (in liq) [2022] VSC 228, in which Associate Justice Gardiner found that a Sale Agreement disposing of key assets to a related entity on the day of appointment of liquidators constituted a creditor-defeating disposition and therefore able to be set aside.

Key takeaways