Introduction

The Full Court of the Federal Court has given some important guidance on the calculation of remuneration for court appointed receivers.  In its decision in Templeton v Australian Securities and Investment Commission the Court has highlighted the importance of proportionality in determining reasonable remuneration.

General Position

Freezing orders and the Foreign Judgments Act

Freezing orders (also known as Mareva orders or Mareva injunctions) are oft-used tools available to a plaintiff to preserve the assets of a defendant, where there is a danger of the defendant absconding or of the assets being removed from the jurisdiction or otherwise diminished. Such dangers put in peril the ability of a plaintiff to recover any favourable judgment against that defendant.

1. On 11 March 2015, the High Court delivered its decision in Fortress Credit & Anor v Fletcher & Ors [2015] HCA 10.
2. The appellant was Fortress Credit.

1. On 11 March 2015 the High Court delivered its decision in Grant Samuel & Ors v Fletcher & Ors [2015] HCA 8.
2. The appellants were Grant Samuel Corporate Finance Pty Limited and JP Morgan Chase Bank.

The Senate has announced a national inquiry into insolvency in the Australian construction industry (Inquiry).^[1] 

In the lead up to peak periods, many businesses come under financial pressure due to various internal and external factors. Seasonal sales may not have been as planned and provision needs to be made for employee holiday pay.

On 7 November 2014 the Government released the Insolvency Law Reform Bill.

The Bill comprises of a package of proposals aimed at amending and streamlining the Bankruptcy Act 1966 and the Corporations Act 2001. It also contains proposals to reform how liquidators are registered and regulated.

Requirements to become a liquidator

Of particular interest to practitioners are the changes to the way new liquidators will become registered.

Achieving sales growth is a significant challenge for many Australian businesses. Even if new customers can be found, an inability to collect and hold onto payments can pose another obstacle to growth.

To survive and prosper businesses must plan, and implement, strategies for sustained profitability. It is not enough to simply achieve fantastic sales results and get the money in, businesses must also anticipate, and protect against, the risk that payments received from customers may be clawed back if a liquidator is later appointed to the customer.

Introduction

The recent decision of the Federal Court in the matter of Divitkos, in the matter of ExDVD Pty Ltd (In Liquidation) [2014] FCA 696 confirms that where a receiver is required to make a payment under Section 433 of the Corporations Act 2001 (Cth) (Act) to a priority creditor (such as employee entitlements), the secured creditor (who appointed the receiver) may be entitled to be subrogated to the rights of that priority creditor in the winding up of the company.

The Law