This week’s TGIF considers the recent decision of In the matter of PIC Lindfield 19 Pty Ltd (in liq)[2022] NSWSC 271, in which former directors of the company in liquidation failed to set aside summonses for public examination on the basis of alleged non-disclosure by the liquidators.
Key Takeaways
This article first appeared in FIRE magazine.
Introduction
A bankruptcy court’s recent decision in Bailey Tool & Mfg. Co., et al. v. Republic Bus. Credit (In re Bailey Tool & Mfg. Co.), Adv. No. 16-03025-SGJ (Bankr. N.D. Tex. Dec. 23, 2021) serves as a reminder for lenders that they should avoid certain actions when dealing with distressed borrowers. Specifically, in Bailey, a bankruptcy judge found a lender squarely at fault for its borrower’s bankruptcy and subsequent liquidation, and held the lender liable to the borrower’s bankruptcy estate for various breach of contract, tort, and bankruptcy claims.
In the past, the reliance on section 553C of the Corporations Act 2001 (Cth) (Act) as a ‘set-off’ defence to an unfair preference claim, under section 588FA of the Act, has caused controversy in the insolvency profession. Due to a recent decision of the Federal Court of Australia, the ‘set-off’ defence is no longer a defence to an unfair preference claim.
On 23 February 2022, WBHO Australia Pty Ltd and 17 other companies in the Probuild group (Probuild, or the Group), entered voluntary administration in Australia. Probuild is one of the largest construction groups in Australia, working on many large office, residential and resources related construction projects across the country.
The Companies and Intellectual Property Commission (CIPC) issued a Business Rescue Proceedings Report (Business Rescue Report) on business rescue proceedings from its inception on 1 May 2011 to 31 December 2021 – a “ten-year” scorecard. It takes stock of how business rescue has developed over that period and whether South Africa has matured as a late entrant into the playing field of corporate restructuring regimes. The story must be told over the “ten-year” period and dissected into two parts: pre- and post-pandemic.
Agricultural economists have long warned of a looming farm crisis. However, for the most part, they have been wrong. In 2021, nationwide Chapter 12 family farmer bankruptcy filings were at second lowest level since Chapter 12 was enacted in 1987. The low level of Chapter 12 filings is all the more surprising given that Congress more than doubled the debt limit for Chapter 12 eligibility (to $10 million) in 2019.
The situation, which is already unpleasant in itself for a shareholder of a bankrupt company, becomes really annoying in many cases due to the insolvency administrator's right to challenge insolvency under sections 129 et spp. InsO, the situation becomes really annoying in many cases. It is particularly annoying if the shareholder has provided security for the claim of a company creditor for the repayment of a loan and is claimed by the insolvency administrator under sections 143 (3) and 135 InsO (shareholder loan) despite the fact that the company has already repaid the loan.
This entry is part of Nelson Mullins’s ongoing “Bankruptcy Basics” blog series that is intended to address foundational aspects of bankruptcy for non-bankruptcy practitioners and professionals. This entry will explain the concepts of the bankruptcy “estate” and “property of the estate” and the importance thereof.
In a recent decision,1 the United States Bankruptcy Appellate Panel of the 9th Circuit clarified an important step that construction lienholders must take to perfect their liens when the debtor has filed a bankruptcy petition before the lienholder files a foreclosure lawsuit.