The High Court’s recent decision in Selig v Wealthsure Pty Ltd [2015] HCA 18 carries a warning for both financial service providers and their professional indemnity insurers.

Background

Introduction

Early in his or her appointment a liquidator in a creditors' voluntary liquidation (CVL) should consider applying to the Court to convert the CVL to a Court ordered winding up in insolvency.  Conversion may benefit the unsecured creditors, in whose interests the liquidator acts, by enabling the liquidator to pursue claims and make recoveries not available in a CVL. 

The reasons liquidators have applied for conversion include:

The Australian Corporations Act 2001 provides that a company in liquidation that holds insurance for the benefit of third parties must pay the proceeds of the insurance policy to those third parties in priority to other creditors.  Insurance proceeds payable to third parties under this provision are subject to deductions of "any expenses of or incidental to getting in" those proceeds.  The liquidator of Brighton Hall Securities Pty Ltd sought directions from the court regarding the liquidator's entitlement to deduct his fees and expenses from the insurance proceeds.

Morgan, in the matter of Brighton Hall Pty Ltd (in liq) [2013] FCA 970 considered whether a liquidator can claim remuneration in preference to third parties who would otherwise be given priority under s 562 of the CorporationsAct 2001 (Cth) (CA).

In its recent judgment of Morgan,In the matter of Brighton Hall Securities Pty Ltd (in liquidation) [2013] FCA 970, the Federal Court of Australia determined that a liquidator is entitled to retain certain remuneration and other expenses from the proceeds of a claim under a professional indemnity insurance policy in preference to claimants, who would otherwise have a statutory priority under section 562 of the Corporations Act.

BACKGROUND

In Lehman Brothers Australia Limited, in the matter of Lehman Brothers Australia Limited (in liquidation) (No 2) [2013] FCA 965, the Federal Court again confirmed that schemes of arrangement are a viable restructuring tool to compromise claims involving a class of creditors and third parties.

BACKGROUND

Summary

The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 (Regulations) to amend the structure of UK annual reports have been published and laid before Parliament.

The Financial Reporting Council (FRC) and institutional bodies have published the following guidance in relation to corporate governance and directors' remuneration in the last few months.

The Hogan Lovells’ Corporate Insurance Newsletter for January 2020 has been published. This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants. In this issue, amongst other items, we cover: