Winding up a company when you are the trustee in bankruptcy of the sole director and shareholder can be more complicated than you think.
If you’re a creditor and for some reason, your debtor is showing no signs of repaying what they owe, what are your options? In some cases, you may be able to bankrupt your debtor. Once a court judgment has been entered against your debtor, you are entitled to take steps to have them declared bankrupt. Your judgment debtor must be an individual (not a company), and the judgment debt must be $5,000 or more. But is it worth it?
In December 2015 the Federal Government announced proposed reforms to insolvency laws as part of its National Innovation Statement (NIS).
When an individual becomes bankrupt, the bankrupt’s property vests in the bankruptcy Trustee with a number of exceptions. One exception is in respect of the bankrupt’s interest in a regulated superannuation fund, an approved deposit fund or an exempt public sector superannuation scheme.
Legend International Holdings Inc (in Liquidation) v Indian Farmers Fertiliser Cooperative Limited [2016] VSCA 151
The Australian Court of Appeal refused an appeal against a winding up order made in relation to Legend in Australia where Chapter 11 proceedings were on foot in the United States.
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This week’s TGIF considers the case of Compton v Ramsay Health Care Australia Pty Ltd [2016] FCAFC 106, where the Court exercised its power to “go behind” a judgment upon which a petitioning creditor relied as proof of a debt that was owed.
WHAT HAPPENED?
The Australian government is working to significantly reform Australia’s current insolvency laws by mid-2017.
The reforms are intended to achieve greater likelihood of business preservation by introducing the flexibility to achieve real turnaround of businesses in crisis.
The proposed changes include:
The Bankruptcy Act 1966 (Cth) specifies the circumstances in which a bankrupt is entitled to continue prosecuting legal proceedings after a sequestration order has been made. Sections 60 and 116 of the Act allow a bankrupt to continue with their proceedings if the proceedings are “in respect of any personal injury or wrong done to” the bankrupt.
This week’s TGIF considers Legend International Holdings Inc (In Liquidation) v Indian Farmers Fertiliser Cooperative Ltd & Kisan International Trading FZE [2016] VSCA 151 in which it was held that s 581 does not prohibit a winding up order where Chapter 11 proceedings are on foot.
What happened?
This week’s TGIF considers the Federal Court decision of National Australia Bank Ltd v Garrett [2016] FCA 714 in which the Court stepped in to invalidate and restrain an improper registration on the PPSR
BACKGROUND