Where it appears that there has been concealment or removal of valuable assets and little to no co-operation from the directors in the course of a liquidation, the section 530C warrant procedure in the Corporations Act 2001 (Cth) has proven to be an effective means of obtaining information regarding company books and assets.

As 2021 draws to a close, we look back at the key developments and cases in Bankruptcy & Insolvency, in what has been another very challenging year for businesses. Thank you for being part of our news service as we continued to navigate the changes brought about by COVID-19.

We have provided a snapshot below of the major developments for 2021 and analysed how the pandemic has impacted business which are struggling financially. We also provide a prediction of the key issues which are likely to prevail in 2022.

This week’s TGIF considers a recent decision that provides guidance on how and when a liquidator can sell partnership assets held by an insolvent corporate partnership manager to satisfy creditors’ claims.

Key Takeaways

A couple who were undischarged bankrupts have not been successful in seeking an exemption under the bankruptcy law to exclude certain assets from being divisible amongst the creditors of their bankrupt estates. Particularly, the exemption sought required that their interests in the disputed assets (cash, shares and residential properties) be held by way of interests in their self-managed superannuation fund (SMSF).

On 4 November 2021, the High Court of Australia heard the arguments put forward by Wells Fargo Trust Company, National Association and Willis Lease Finance Corporation, together Wells Fargo, and the administrators (the Administrators) of the Virgin Australia Airlines group, which entered into administration on 20 April 2020. The dispute primarily concerned who should pay for the redelivery of four aircraft engines capable of being used on B737s (the Engines) to the lease redelivery location in Florida.

It is important for a receiver or voluntary administrator to ensure that a proper sales process is undertaken relevant to the circumstances as there is no "one-size-fits-all" approach.

Carna Group Pty Ltd v The Griffin Coal Mining Company (No 6) [2021] FCA 1214

In Carna Group Pty Ltd v The Griffin Coal Mining Company (No 6) [2021] FCA 1214, McKerracher J considered the meaning of “insolvent” within the context of a commercial contract and relevantly found that:

A de facto wife has been unsuccessful in an appeal against a declaration that a binding financial agreement covered all the property of the parties.

The de facto wife became bankrupt after filing the appeal and her trustee in bankruptcy did not wish to pursue the appeal. The court considered that any property that the de facto wife would be entitled to in property settlement would vest in her trustee in bankruptcy.

The court found the de facto wife did not have sufficient interest in the order which was the subject of the appeal in order to give her standing.

The Australian Sawmilling Company Pty Ltd (in liq) v Environment Protection Authority [2021] VSCA 294

Background

The Australian Sawmilling Co Pty Ltd (in liq) v Environment Protection Authority [2021] VSCA 294

The Victorian Court of Appeal’s decision in The Australian Sawmilling Co Pty Ltd (in liq) v Environment Protection Authority [2021] VSCA 294 casts significant doubt on liquidators’ capacity to rely upon section 568 of the Corporations Act to disclaim environmental liabilities, despite the absence of any involvement of the liquidator in the creation of those liabilities.