The High Court of Australia recently decided that when a landlord goes into liquidation, the liquidator may be able to disclaim a lease granted by the landlord.
For a tenant there can be very serious and very expensive consequences if a lease it has taken is disclaimed by its landlord’s liquidator.
A tenant may, however be able to take some steps to protect itself and avoid the expensive and significant consequences of a disclaimer of a lease by the landlord’s liquidator.
What does disclaim mean?
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).
After nearly 20 years, the long running Bell litigation is almost over, with the Supreme Court of Western Australia having approved the settlement between the liquidators of the Bell group of companies and the syndicate of banks involved in the litigation (Re Bell Group (In Liq); Ex Parte Antony Leslie John Wooding as Liquidator of the Bell Group Ltd (In Liq) [2013] WASC 409).
BACKGROUND
In a decision handed down earlier today, in Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers appointed) (in liquidation) [2013] HCA 51, the majority of the High Court upheld the Victorian Court of Appeal’s conclusion that the liquidators of an insolvent landlord can disclaim a lease, thereby extinguishing the tenant’s leasehold interest.
Today the High Court of Australia handed down a decision which confirms a liquidator has the green light to disclaim leasehold interests in land (Willmott Growers Group Inc v Willmott Forests Limited (receivers and managers appointed)(in liquidation)).
Due to the way in which the case came before the Courts, the High Court did not consider the application of s568B of the Corporations Act 2001 (Cth) (Act).
This section allows tenants to challenge in Court the liquidator’s disclaimer.
Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers appointed) (In Liquidation) [2013] HCA 51
Overview
Section 568 of the Corporations Act 2001 (Cth) (Act) gives liquidators broad powers to disclaim onerous property.
Until the High Court’s decision, it was unclear whether this power entitled a liquidator of an insolvent landlord to disclaim a lease, such that the solvent tenant no longer has any proprietary interest in the land.
Summary
In this eBulletin we discuss a recent Supreme Court of NSW decision: In the matter ofGreat Wall Resources Pty Limited (In Liq) [2013] NSWSC 354. This decision provides useful insight into the scope of unreasonable director-related transactions.
BACKGROUND
The company P Hindle & Co Pty Ltd (WA) was placed in liquidation in 2008. Mr Huxtable was appointed as liquidator of the company (Liquidator). The Liquidator acted as chairperson at a meeting of creditors in late 2010 where 4 out of a potential 161 creditors attended.
The recent decision of the Federal Court of Australia in Australian Securities and Investments Commission v Dunner [2013] FCA 872 has resulted in an order that Melbourne insolvency practitioner Andrew Dunner repay over
$600,000.00 in remuneration and be prohibited from practicing as a liquidator for a period of five years.
“A failure to respond to a statutory demand can have very serious consequences for a company. In particular, it may result in the company being placed in liquidation and control of the company passing to the liquidator of the company.”
What would you do if you saw the notice above in a box prominently displayed at the top of a document addressed to your company claiming that money is due and owing and specifying that you take urgent action within 21 days?