While the winding up of a company is a last resort in the context of shareholder oppression, the discretion to order a winding up will be exercised by the Courts if the circumstances dictate that it is the most appropriate remedy, such as where it will provide finality and certainty for the shareholders without undermining the value of the company’s projects to a potential purchaser on winding up.
Whether you are a John Donne, Ernest Hemingway or Metallica fan, the above clause rings a bell. Last week the Court of Appeal for Western Australia joined those “Riding the Lighting” and provided its own musings on “For Whom the Bells Tolls” down under. Rather than affirming that the bell tolls for the infamous Spanish guerrilla fighters or a tortured metaphysical poet, the Australian court provided a new answer: The Bell [decision] tolls for “would be” secured lenders.
The recent Victorian Supreme Court case of Grapecorp Management Pty Ltd (in liq) v Grape Exchange Management Euston Pty Ltd provided an interesting analysis of when set-off, pursuant to section 553C(1) of the Corporations Act 2001, may be claimed.
When can a set-off be claimed against debts owed to an insolvent company?
The recent Victorian Supreme Court decision of Grapecorp Management Pty Ltd (in liq) v Grape Exchange Management Euston Pty Ltd [2012] VSC 112 clarifies the application of set-off provisions for insolvent companies.
BACKGROUND
Grape Exchange Management Euston Pty Ltd (Grape Exchange) provided various services in relation to vines and grapes, pursuant to a Management Agreement with Grapecorp Management Pty Ltd (in liq) (Grapecorp).
Grape Exchange claimed that it had a right of set-off under section 553C of the Corporations Act.
The recent case of Deputy Commissioner of Taxation v Bayconnection Property Developments Pty Limited [2012] FCA 363 is a rare example of the Court allowing an adjournment of a winding up application in connection with a tax debt pending an appeal.
Facts
We recently released an e-alert on the law reforms on directors’ derivative liability. Although not directly part of the derivative liability reforms, the close of 2011 and the first half of 2012 has seen a variety of exposure drafts, submissions, and parliamentary jostling over another key area of directors’ liability – the Federal Government’s law reforms to counter phoenix activities.
Background: the Timbercorp Group
On 15 February 2012 the Commonwealth Government introduced the Corporations Amendment (Similar Names) Bill 2012.
Purpose
The purpose of this Bill is to amend the Corporations Act such that directors of failed companies can be jointly and individually liable for the debts of a company that has a similar name to a pre-liquidation name of a failed company.
The Bill itself is purportedly part of the Government’s election commitment from the Government’s Protecting Workers Entitlements Package announced in July 2010.
In the recent case of Dwyer & Ors and Davies & Ors v Chicago Boot Co Pty Ltd [2011] SASC 27, Chicago Boot claimed that certain payments made to it by two insolvent companies were not unfair preference payments, because of, amongst other defences, the purported application of a retention of title clause in relation to the supply of goods by Chicago Boot.
The Australian unit trust industry recently experienced financial difficulties. The formal legal process of handling those difficulties has revealed gaps in the Australian regulatory map.
This article highlights some of those problems and the Government’s response to them.
Background