In ACN 004 410 833 Ltd (formerly Arrium Limited) (in liq) v Michael Thomas Walton & anor,^[1] the New South Wales Court of Appeal considered the purpose for which public examination summons and production of documents can be ordered.

When an individual declares bankruptcy, the trustee-in-bankruptcy (trustee) may be able to claim, and sell, some of the bankrupt’s assets. The trustee can then use the proceeds from the sale to repay any money owed to creditors. Assets may include, but are not limited to, real estate, vehicles, tools, equipment, furniture, bank balances and lottery winnings.

(This article was originally published in the Australian Restructuring Insolvency & Turnaround Association Journal, Vol. 33 – March 2021)

A liquidator can be exposed personally in litigation. In this article we discuss the risks to a liquidator associated with litigation by examining some recent cases where liquidators have been ordered to pay costs personally. To mitigate these risks, we provide guidance on litigation strategy for liquidators.

Background

The plaintiff was the primary trading entity within a larger group of companies which operated a development and construction business.

The liquidation of the group was complex, with a significant number of claims identified as requiring investigation. Further, ASIC’s allegations of serious misconduct resulted in a significant amount of the liquidator’s time being allocated to assisting ASIC with its investigation.

Problem

The Federal Court of Australia has ordered two company directors to personally compensate customers, pay a large fine and be disqualified from managing a corporation for being ‘knowingly concerned’ in unconscionable conduct by their company and ‘causing it’ to make false or misleading representations, in contravention of the Australian Consumer Law.

The orders made by the Federal Court of Australia against the company directors of Australian 4WD Hire, a vehicle rental company, were:

As part of the Federal Government’s suite of reforms to insolvency laws in response to the COVID-19 pandemic, directors of insolvent companies with total debts not exceeding $1 million are eligible to appoint a Small Business Restructuring Practitioner (SBRP).

This new regime allows directors of eligible companies to retain control of their business while working alongside an SBRP to develop a proposed restructuring plan for approval by the company’s creditors.

In brief On 1 January 2021, the Federal Government's post-COVID small business restructuring reform package1 came into effect.

It is possible for a trustee in bankruptcy to make a claim to property held by a bankrupt on trust. For example, by lodging a caveat over a home that is held on trust.

A trustee in bankruptcy may be able to make a claim, relying on the bankrupt’s right of indemnity as trustee of the trust. This is because the bankrupt’s right of indemnity, as trustee, is itself property that vests in the trustee in bankruptcy under the Bankruptcy Act 1966.

Explaining a trustee’s right of indemnity

In this issue, we consider Qantas’ recent Full Federal Court win in its JobKeeper stoush with the union, and the interpretation of who is entitled to the COVID-19 cash flow boosts following on from the AAT’s decision in Slatter Building Group Pty Ltd and Commissioner of Taxation (Taxation) [2021] AATA 456. We also provide an update on the latest appeals, ATO guidance and rulings.

Buckle up, Qantas’ fight over JobKeeper entitlements isn’t over yet

Bankruptcy is one option for dealing with insolvency. Insolvency is the inability for an individual, or company, to pay their debts as and when they fall due. Although bankruptcy can provide bankrupts with relief from the majority of their debts, and essentially allow them to make a fresh start, there are also downsides. This article explores the consequences of declaring bankruptcy for both the bankrupt and their business.

The ramifications of bankruptcy are laid out in the following table: