Executive summary

On 11 February 2016 the High Court delivered a unanimous judgment¹ which clears the path for liquidators and others to join insurers of defendants to proceedings, enabling the determination at the same trial as to whether an insurer has an obligation to indemnify defendants in respect of any liability that may be found against those defendants.

The Court of Appeal has refused to allow a liquidator of a company that was the vehicle for a VAT fraud to rely on the defence of illegality in defending a claim for breach of duty under section 212 of the Insolvency Act 1986: Top Brands Ltd and others v Sharma (as former liquidator of Mama Milla Ltd) [2015] EWCA Civ 1140.

The recent case of The Joint Official Liquidators of A Company v B and Another has confirmed that a liquidator of a foreign company can seek the Hong Kong Companies Court’s assistance by applying for orders for the production of information and documents without the need to also apply to wind up that company in Hong Kong.

Background

In brief

The exercise of the court’s discretionary jurisdiction to wind up an unregistered overseas company has again come under judicial spotlight in the recent case of Re China Medical Technologies Inc. (HCCW 435/2012).

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.

On March 15th, the FDIC published for comment a proposed rule that would establish the priority of payments to creditors when the FDIC acts as liquidator for a failed non-bank financial institution. The proposal also would establish the procedures for filing a claim with the receiver and clarifies the receiver's clawback authority. Comments should be submitted within 60 days after publication in the Federal Register, which is expected during the week of March 21.

On February 23, 2009, Pennsylvania became the second state to recognize an "ordinary course of business" exception to preference actions brought under a state insolvency statute where the defense is not expressly provided for in the statute. In Joel S. Ario, Insurance Commissioner of the Commonwealth of Pennsylvania, in His Official Capacity as Liquidator of Reliance Insurance Company, Appellant v. H.J. Heinz Company, H.J. Heinz Company, L.P., H.J. Heinz Finance Company, and Portion Pac, Inc., et al., Appellees, No. 21 MAP 2006 (Pa. Feb.

Introduction

Before July 2016, in order to wind-up a strata corporation voluntarily through a liquidator in B.C., unanimous approval of the strata owners was generally required. The unanimity requirement made strata wind-ups a rare event, and consequently it was exceedingly difficult for owners to sell a strata complex in its entirety for redevelopment. In an influential 2015 report, the B.C. Law Institute (“BCLI”) identified some of the problems with the unanimity requirement:

Key Points