On 29 April 2016, the Federal Government released a Proposals Paper titled ‘Improving bankruptcy and insolvency laws’.
The Government is proposing these reforms to encourage entrepreneurship and investment. It hopes to reduce the stigma and detriment around failed business ventures, while still balancing the need to protect creditors.
Welcome to the first edition of the Herbert Smith Freehills Guide to Restructuring, Turnaround and Insolvency, Asia Pacific .
This week’s TGIF considers Clive Palmer’s recent challenges to the constitutionality of the Court’s power under the Corporations Act to issue examination summonses.
What happened?
On 18 January 2016, administrators were appointed to Queensland Nickel Pty Ltd (QNI) pursuant to s 436A of the Corporations Act 2001 (Act). The creditors subsequently resolved that QNI be voluntarily wound up and the administrators were appointed as liquidators (the General Purpose Liquidators).
Last month former Kleenmaid director Bradley Young not so valiantly marched into the history books when found guilty of 17 charges of insolvent trading and one count of fraud after one of the longest criminal trials ever held in Queensland. This followed fellow director, Gary Armstrong, pleading guilty to two counts of insolvent trading and one count of fraud.
This week’s TGIF looks at the departure from the general costs rule considered in In the matter of Condor Blanco Mines Ltd (No. 2) in circumstances where the administrator was found not to have discharged the duty of essential neutrality.
In 2014 the liquidators of Walton Constructions were removed by the Federal Court due to a perceived lack of independence arising from a referral relationship.
ASIC v Franklin1 (Walton) was commented on by the media, ASIC and ARITA and brought about changes to the ARITA Code of Professional Practice to expand the scope of disclosure required in relation to referral relationships.
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:
This week’s TGIF considers Britax Childcare Pty Ltd, in the matter of Infa Products Pty Ltd v Infa Products Pty Ltd (Administrators Appointed) [2016] FCA 848 which considers setting aside a DOCA and the administrator’s casting vote.
FACTS OF THIS CASE
After complex litigation with Britax, Infa Products lost the case and as a direct consequence, appointed administrators.
In Cato Brand Partners Pty Ltd v Air India Ltd the Supreme Court was required to consider whether or not a foreign company had grounds to challenge an application for a winding up order in circumstances where it had not sought to set aside a statutory demand within the required 21 day period.
When serving an application to set aside a statutory demand interstate, the strict modes prescribed by SEPA trump service under the Corporations Act (or any mode of informal effective service which might otherwise suffice). Practitioners forgetting this may face a rather abrupt conclusion to proceedings.