Facts
Extension for intermingling of assets
Issues
On April 13 2010 the Court of Cassation rendered a noteworthy decision sending two interlocutory questions to the European Court of Justice (ECJ). In anticipation of the ECJ's decision, this update examines the issues raised before the Court of Cassation.
Introduction
The Sapin II Act of November 8 2016 amended the regime governing directors' liability in an insolvency scenario in order to encourage the recovery of honest directors of failed businesses.
A recent decision of the Slovak Courts suggest that if main proceedings have been opened in one member state and the debtor has assets in Slovakia, the insolvency practitioner in the main proceedings must act quickly and sell those assets before secondary proceedings are opened in Slovakia, otherwise he runs the risk of losing the assets to the secondary estate. Legal title to the assets must have passed to the buyer before the secondary proceedings are opened; it is not enough just for contracts to have been exchanged.
Introduction
(Cass. Com, Feb. 19, 2013, no. 12-13.662)
In the instant case, a lessee had been placed into receivership on September 27, 2010, and then into court-ordered liquidation on November 8, 2010. Subsequently, on December 28, 2010, the lessor had served the liquidator with notice of termination for nonpayment of the rents accrued since the opening of insolvency proceedings.
Gesetz zur Verbesserung der Rechtssicherheit bei Anfechtungen nach der Insolvenzordnung und nach dem Anfechtungsgesetz
A director is not absolutely liable for all losses suffered by a company on his or her watch.
So the Court of Appeal has ruled in a recent liquidation dispute.
The context
Rowan Johnston, a former investor and director in NZNet, pumped funds into the company when it ran into difficulties, but found that NZNet’s managing director Stephen Andrews had misled him about the company’s financial position.
On 15 September 2011, he resigned his directorship and a couple of months later, NZNet went into liquidation.
Liquidators are not limited to the procedure set out in section 295 of the Companies Act to recover a debt once an insolvent transaction has been set aside.
In Strategic Finance Limited (in receivership & in liquidation) and Strategic Nominees Limited (in receivership) v Bridgman and Sanson CA 553/2011 [2013] NZCA 357 the Court of Appeal has, for the moment, settled what constitutes an "account receivable", and this provides certainty regarding the scope of the assets available to meet preferential creditor claims ahead of secured creditors with general security agreements.