The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 (Cth) (Amending Act) passed into law on 17 February 2020, over a year after it was first introduced to Parliament.
Placing phoenix activity firmly in its crosshairs, the Amending Act introduces long anticipated reforms to Australia’s efforts to curb phoenix activity.
Background
The appointment of special purpose liquidators (SPLs) has become increasingly common, with Courts now readily agreeing to appoint a liquidator who is nominated and funded by a creditor. Those appointments increasingly occur in circumstances where there is no direct conflict or criticism of the general purpose liquidator (GPL), and can be frustrating for the GPL.
In its recent decision in the ongoing Solar Shop litigation,[1] the Full Federal Court established two key principles which will have significant ongoing implications for the conduct of unfair preference claims:
ASIC is becoming more serious and more active and will take action against directors if there is su cient reason to, so insolvency practitioners should consider all possible actions/recoveries fully in any report to ASIC.
A company's financial distress presents a challenge for its directors and officers of large and complex financial services companies and can raise a range of difficult issues, including potential liability for insolvent trading, which potentially exposes directors both to civil and criminal consequences under the Corporations Act 2001(Cth).
The changes create new civil and criminal offences for the transfer of assets which are “creditor-defeating dispositions”, and also give ASIC, the ATO and liquidators additional powers in a bid to increase successful enforcement of these new laws.
During the second half of 2019, it was generally accepted that the US/China trade war was the most likely macroeconomic event that would precipitate a global slowdown. Even then, given the enormous amount of ‘dry powder’ capital that was available in the market, the downturn, if any, was expected to be mild.
The perception of Australia as being a relatively “risky” place to sit on a Board has generally focused on the insolvent trading prohibition in section 588G of the Corporations Act 2001 (Cth) and how it interacts with general directors’ duties.[1]
As the name suggests, the UNCITRAL Model Law on Cross-Border Insolvency 1997 (Model Law) seeks to address complexities caused where insolvencies cross borders, while leaving substantive insolvency laws of each country largely unaltered. However, as jurisdictions continue to adopt and interpret the Model Law, inconsistencies in its application are coming to light.
On 11 December 2019, the NSW Court of Appeal found that an administrator should not have used his casting vote to block a resolution for the appointment of a different person as the company’s liquidator. The decision (Glenfyne International Holding Limited v Glenfyne Farms International AU Pty Ltd (in liq) [2019] NSWCA 304) reverses a previous decision where the Court found that it did not have the power to disturb the result of the vote.
Background
This week’s TGIF considers the decision in Adelaide Brighton Cement Limited v Concrete Supply Pty Ltd (Subject to Deed of Company Arrangement) (No 4)[2019] FCA 1846, where the Court terminated a deed of company arrangement in circumstances where the administrators had not undertaken sufficient investigations.
Background
On 4 November 2017, administrators were appointed to Concrete Supply Pty Ltd.