Good afternoon. Here are our summaries of the civil decisions of the Court of Appeal for Ontario for the week of August 8, 2022.

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The European Union (Preventive Restructuring) Regulations 2022 have amended the Companies Act 2014 so as to require for the first time in statute that directors of companies unable, or likely to be unable, to pay their debts, must have regard to the interests of creditors.

A preferential transaction occurs where an insolvent person or debtor makes a transfer of property or a payment that has the effect of favouring one creditor over another. Creditors and bankruptcy trustees can use federal or provincial legislation to attack preferential transactions. A recent Ontario Court of Appeal decision, Golden Oaks Enterprises Inc v Scott, 2022 ONCA 509, upheld the finding that certain transactions were an unlawful preference under section 95(1)(b) of the Bankruptcy and Insolvency Act, RSC 1985 c B-3 (“BIA”).

There are various ways to wind up or liquidate a limited liability company. Each method will essentially realise the assets of the company and distribute the proceeds to the company’s creditors or shareholders, but they are individually unique as to the processes that need to be followed.

One such method is a Members’ Voluntary Liquidation.

What is a Members’ Voluntary Liquidation?

On Friday, 29 July the Minister for Enterprise, Trade and Employment signed into law the European Union (Preventative Restructuring) Regulations 2022 (the "Regulations").

Introduction

When a company commences winding-up, the disposition of its property and the transfer of shares in the company is void, unless the Court otherwise orders. Under what conditions will the Court allow such disposition or transfer? This was the question in Ong Boon Chuan v Tong Guan Food Products Pte Ltd [2022] SGHC 181, when the Singapore High Court was faced with an application for the sale and transfer of shares in an insolvent company ("Company").

Part 1 of this two-part series explored potential legislative changes which could impact the Australian insolvency landscape in 2022 and beyond. Part 2 addresses the recent major developments in case law that have the potential to shape the insolvency landscape in Australia for many years to come.

In Stratford Hamilton (joint liquidator of Mobigo Ltd (in liquidation)) v James Mcateer, Teresa Delgaudio [2022] the court dismissed the directors' application to strike out misfeasance claims against them. 

Background 

The Insolvency Law Senate of the Federal Labour Court (Bundesarbeitsgericht, BAG) was again asked to provide a clear answer to this pivotal question on 25 May 2022 (Case No. 6 AZR 497/21). The case concerned an action for annulment taken by the insolvency administrator against a payment received by an employee from their insolvent employer. The insolvency administrator was tasked with administering and disposing of the assets of the insolvent employer.