This week’s TGIF considers a refusal by the Federal Court to declare void or terminate a DOCA on the grounds of alleged prejudice & injustice or due to omissions in the administrator’s report to creditors.

Background

R Developments Pty Ltd (the Builder) operated a residential construction business and entered into a contract for the construction of a residential property in 2012.

It is inevitable that companies will face periods of financial distress during their corporate lives. During these times, it is incumbent on the directors and management to seek to maximise the company's chances of survival and preserve value for stakeholders. Certainly it has not been uncommon for directors to use the threat of voluntary administration as a part of their stakeholder management strategy during these times.

Creditors' rights to information and records

This week’s TGIF considers a recent application for removal of liquidators where creditors argued that the liquidators had not properly discharged their duties and were not independent.

Background

On 19 June 2019, the much-anticipated High Court appeal in the matter of Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth [2019] HCA 20 (also known as the "Amerind appeal") was handed down.

In February 2019 the Federal Court delivered its decision in Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) (No 2).[1] The proceedings were commenced by the liquidators of three companies, SK Foods Australia Pty Ltd (in liquidation), Cedenco JV Australia Pty Ltd (in liquidation) and SS Farms Australia Pty Ltd (in liquidation).

This week’s TGIF considers the decision in Cremin, in the matter of Brimson Pty Ltd (In Liquidation) [2019] FCA 1023, which confirms that liquidators should approach the Court before taking steps to realise trust assets.

Background

How should the liquidator of an insolvent trustee company ensure payment out of trust assets of the entirety of his or her remuneration and expenses?

Who should read this eBrief:

• Company directors
• Accountants
• Financial Advisors

Proposed changes to Commonwealth legislation could have a significant impact on the potential for transferring assets out of one company into a new company to avoid paying liabilities.

If enacted, the changes will give liquidators, ASIC, and the ATO new powers to prosecute culpable directors and associated persons.

Winemakers can run into significant tax problems after transferring their businesses to a company or trust structure. While income tax relief may be available on the transfer of the business assets, many winemakers and their accountants fail to realise that such restructures can eliminate or substantially reduce a winemaker’s entitlement to the Wine Equalisation Tax rebate. For winemakers who are heavily reliant on the WET rebate for profitability and cash flow, overlooking such consequences can be disastrous.