A hotly anticipated decision in the ongoing saga of the Babcock & Brown liquidation was handed down last week, resulting in another win for the liquidator (represented by Johnson Winter & Slattery) and further highlighting the challenges facing liquidators when they are thrust into a quasi-judicial function when assessing proofs of debt.

The Melbourne RIT team recently published an article on the decision of the Full Court of the Federal Court of Australia in Badenoch (No 1) [2021] FCAFC 64. On 24 June 2021, the Full Court published a second judgment that fixed the start and end dates of the ‘single transaction’ between Gunns and Badenoch.

The Gunns liquidators have since made a special leave application to the High Court to appeal both of the Full Court’s decisions.

In the recent case of Jane v Secatore (Liquidator), in the matter of Last Lap Pty Ltd (in liq) [2021] FCAFC 108, the Court heard an appeal of a decision that dismissed an application to discharge summonses issued concerning public examinations by the liquidator of Last Lap Pty Ltd (in liquidation) (Last Lap).

The fact of the Case

The applicant applied to the Court to discharge summonses issued to himself and various entities.

The application was on two main bases:

In Lawrence, Ozifin Tech Pty Ltd (in liq) v AGM Markets Pty Ltd (in liq)[2022] FCA 1478, liquidators of multiple companies were successful in obtaining the declarations and directions they sought regarding the distribution of statutory trust funds, and obtaining payment of their fees from trust assets.

Despite ruling in favour of the peak indebtedness rule’s existence only 12 months prior, on Monday, the Federal Court reversed its decision in Badenoch Integrated Logging Pty Ltd to revoke the rule’s operation in Australia.

Background

The liquidators of Gunns, a major forestry enterprise, commenced proceedings for an unfair preference claim under section 588FA of the Corporations Act 2001 (Cth) against Badenoch Integrated Logging Pty Ltd, a haulage and timber harvesting contractor.

The pavlova, women’s right to vote, the flat white, the Rugby World Cup… New Zealand has a storied history of beating Australia to the punch. However, Aussie liquidators might not be so keen to throw their trans-Tasman cousins a friendly ‘chur!’ as their ability to pursue unfair preference claims continues to be eroded following the recent Full Court decision in Badenoch.

In the recent decision ofBadenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) [2021] FCAFC 64,the Full Court of the Federal Court of Australia abolished the use of the peak indebtedness rule in A

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:

The Federal Court of Australia in Yeo, in the matter of Ready Kit Cabinets Pty Ltd (in liq) v Deputy Commissioner of Taxation [2020] FCA 632 has examined the circumstances in which a payment made by a company subject to a deed of company arrangement may be challenged as an unfair preference.

The principal question for Middleton J was whether payments required to be made by a deed of company arrangement were therefore made “under the authority of” the administrators, within the meaning of s 588FE(2B) of the Corporations Act 2001 (Cth).

Virgin gets some good news! The Federal Court in the first significant legal case arising out of the Virgin collapse has again highlighted the need for flexibility in the application of insolvency laws during the COVID-19 crisis