On 4 November 2021, the High Court of Australia heard the arguments put forward by Wells Fargo Trust Company, National Association and Willis Lease Finance Corporation, together Wells Fargo, and the administrators (the Administrators) of the Virgin Australia Airlines group, which entered into administration on 20 April 2020. The dispute primarily concerned who should pay for the redelivery of four aircraft engines capable of being used on B737s (the Engines) to the lease redelivery location in Florida.

Due to a number of factors, including the extent of available capital in the markets and the continued backstop provided by government programs designed to blunt the economic effects of the pandemic, 2021 was not the apocalypse many were predicting. Nevertheless, Canadian restructuring professionals and courts continued to confront and overcome issues in a number of important areas, including extraordinary first day relief, good faith and lack thereof, eligible financial contracts and liquidating Companies’ Creditors Arrangements Act (CCAA) proceedings.

Judge Craig Whitley’s recent transfer of the LTL Management case will bring a high-profile "Texas Two-Step" chapter 11 bankruptcy to New Jersey, and it may open a new chapter in how courts approach the novel transaction designed to isolate and address certain mass-tort liabilities.

In its much-discussed decision, City of Chicago v. Fulton, 141 S. Ct. 585 (2020), the Supreme Court ruled that the City of Chicago (“City”) was not in violation of Section 362(a)(3) of the Bankruptcy Code for failing to release an impounded car to a debtor in bankruptcy.

It is important for a receiver or voluntary administrator to ensure that a proper sales process is undertaken relevant to the circumstances as there is no "one-size-fits-all" approach.

When Covid hit in March 2020 and the country went into lockdown with an associated dip in economic activity and consumer confidence, the viability of many small and medium sized enterprises was called into question. Many directors will have had cause to consider their obligation to place their company into an insolvency proceeding in order to insulate themselves from personal liability, and in particular liability for wrongful trading (continuing to trade when they knew or ought to have known there was no reasonable prospect of the company surviving).

Periodically courts remind corporate directors that their decisions to act or to refrain from acting during the course of managing the affairs of a corporation are not without limitations. It is well established that corporate directors owe fiduciary duties, and more specifically, a duty of care and a duty of loyalty to corporate shareholders. Those duties should always be at the front of mind of every director when any action or inaction is contemplated, but in particular, when addressing challenging issues facing the corporation.

Carna Group Pty Ltd v The Griffin Coal Mining Company (No 6) [2021] FCA 1214

In Carna Group Pty Ltd v The Griffin Coal Mining Company (No 6) [2021] FCA 1214, McKerracher J considered the meaning of “insolvent” within the context of a commercial contract and relevantly found that:

Background

A de facto wife has been unsuccessful in an appeal against a declaration that a binding financial agreement covered all the property of the parties.

The de facto wife became bankrupt after filing the appeal and her trustee in bankruptcy did not wish to pursue the appeal. The court considered that any property that the de facto wife would be entitled to in property settlement would vest in her trustee in bankruptcy.

The court found the de facto wife did not have sufficient interest in the order which was the subject of the appeal in order to give her standing.