On 10 May 2021 in Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq)(receivers and managers apptd)^[i] the Full Court of the Federal Court of Australia abolished the application of the Peak Indebtedness Rule to a running account ‘single transaction’ under section 588FA(3) of the Corporations Act 2001 (Cth) (the Act) in unfair p

In Bechara v Bates,^[1] the Full Federal Court reminds us of the proper procedure for review of a sequestration order made by a registrar. This case raises an important point about bankruptcy practice and procedure in the Federal Circuit Court and the Federal Court.

In Ross, in the matter of Print Mail Logistics (International) Pty Ltd (in liq) v Elias,^[1] the Federal Court considered the extent to which a Jones v Dunkel^[2] inference can be made.

The following company law cases have been reported in CCH Pinpoint:

Insolvency: nunc pro tunc orders made for liquidators of corporate trustee

In the recent decision of Badendoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in Liquidation) (receivers and managers appointed) [2021] FCAFC 64 (Badendoch) the Full Court of the Federal Court of Australia effectively abolished the “peak indebtedness” rule for liquidators pursuing unfair preference claims.

The High Court has released its judgment in Re Halifax NZ Limited (In liq) [2021] NZHC 113, involving a unique contemporaneous sitting of the High Court of New Zealand and Federal Court of Australia.

Introduction

This week’s TGIF considers David Djordjevich v Richard Trygve Rohrt in his capacity as liquidator of ACN 091 518 302 Pty Ltd (in liq) ACN 091 518 302 [2021] VSC 178, a Victorian Supreme Court decision that focuses on the circumstances in which a court will order an inquiry into the conduct of a liquidator and the interests that such an inquiry is intended to serve.

Key takeaways

The recovery of preference payments is a key weapon in a liquidator’s arsenal and, since the introduction of safe harbour reforms in 2017 and the COVID-related suspension of insolvent trading liability (which narrow the scope for recovery from directors), are an increasingly important and prominent part of recovery work undertaken by liquidators.

Despite ruling in favour of the peak indebtedness rule’s existence only 12 months prior, on Monday, the Federal Court reversed its decision in Badenoch Integrated Logging Pty Ltd to revoke the rule’s operation in Australia.

Background

The liquidators of Gunns, a major forestry enterprise, commenced proceedings for an unfair preference claim under section 588FA of the Corporations Act 2001 (Cth) against Badenoch Integrated Logging Pty Ltd, a haulage and timber harvesting contractor.