1. INTRODUCTION

Material Chapter 11 cases have morphed to the point that the outcome is often predetermined at the “first day” hearing. Unsecured creditors with material credit exposure should engage early to protect their interests and reduce risk of loss.

Strelia assisted a franchisor in an action brought against a personal surety – a company director – who attempted to escape his obligations by filing for his personal bankruptcy. However, according to the Court of Cassation, a company director cannot automatically be considered as an enterprise and therefore is not capable of filing for bankruptcy.

In the much-anticipated decision of Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2 (Badenoch (HCA)), the High Court of Australia (the HCA) has now confirmed that the peak indebtedness rule may not be used when assessing the quantum of an unfair preference claim arising from a continuing business relationship.

Strelia stond een franchisegever bij in een procedure tegen een persoonlijke borgsteller – een bedrijfsleider – die zich aan zijn verplichtingen als borg wilde onttrekken door zichzelf failliet te laten verklaren. Echter, volgens het Hof van Cassatie kan een bedrijfsleider niet automatisch als onderneming gekwalificeerd worden en dus niet zomaar zijn faillissement aanvragen.

When a company becomes financially distressed, directors are often required to act quickly and decisively. However, directors may at the same time find themselves held back by the requirements of the Corporations Act 2001 (Cth) (the “Corporations Act”) or their company constitution.

Metal Manufactures Pty Ltd v Morton (as liquidator of MJ Woodman Electrical Contractors Pty Ltd (In Liq)) [2023] HCA 1

TAKE AWAY POINTS

Introduction:

On 5 October 2022, the Supreme Court delivered a landmark judgement in BTI 2014 LLC v Sequana SA [2022]. The decision is the first from the Supreme Court to address when, and in what circumstances, company directors owe a duty to consider the interests of the company’s creditors (‘’the creditor duty’’).

Creditor duty

In BTI 2014 LLC v Sequana SA the Supreme Court considered the issue of the so-called ‘creditor duty’.

In the recent Cayman Islands case of Re In the Matter of E-House (China) Enterprise Holdings Limited[1], dealing with creditors' schemes of arrangement, Justice Segal gave a helpful decision that provided judicial clarity on, among other matters, the potential impact of the recent sanctions regimes in the US, UK and Europe on the scheme, and the international effectiveness of the scheme.