In the recent Court of Appeal decision of Re Willmott Forests Ltd [2012] VSC 29, the Court held that a lessee’s leasehold interest can be extinguished by a liquidator appointed to a lessor company using the disclaimer power in s 568 of the Corporations Act 2001 (Act).
Facts
Key Points:
The decision will give liquidators the certainty of knowing that disclaimer of a lease means that a tenant no longer has any interest in the land.
A recent decision of the Victorian Court of Appeal has confirmed that a liquidator of a landlord can disclaim a lease with full effect, so that the land is no longer encumbered by a tenant's interest.
On 29 August 2012, the Supreme Court of New South Wales (Court) delivered its decision in SingTel Optus Pty Limited v Weston (Costs) [2012] NSWSC 1002. The decision confirms that a liquidator who is removed from their position will be entitled to an indemnity for costs incurred in defending the removal proceedings, unless they act improperly in those proceedings.
Background
Receivers and employees are the greatest losers from a recent chain of court cases. Unless overturned on appeal or by legislation, the cases impose financial burdens on employees and administrative burdens on receivers.
At stake are employees' accrued leave entitlements and the statutory requirement to pay them once a company enters external administration. Employees of companies in receivership can lose entitlements they would ordinarily receive during liquidation depending entirely on the time at which a company enters administration or liquidation.
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.
ASIC’s new administrative powers to wind up companies strengthens the remedial measures that can be taken against business operators attempting to avoid liabilities by abandoning companies and should help employees access their entitlements.
The Corporations Amendment (Phoenixing and Other Measures) Act 2012 (Cth) (Act) will commence on 1 July 2012.
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.
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.