This week on Wednesday 12 September 2018, the High Court of Australia, by a majority judgment (3:2 Kiefel CJ, Edelman and Gaegler JJ concurring), handed down their decision in Mighty River International Limited v Hughes [2018] HCA 38. The majority of the Court held that holding DOCAs, which are deeds of company arrangement that provide additional time for administrators to undertake their investigations, are consistent with the object of Part 5.3A of the Corporations Act 2001 (Cth) and do not contravene any provision of that Part.

What are your responsibilities if there is a change to your company’s registered office?

The Corporations Act 2001 (Cth) (the Act) sets out an exhaustive (and even onerous) list of duties for Australian registered companies and their directors. Among these is the duty to notify the Australia Securities and Investment Commission (ASIC) of a change to the company’s registered office. This must be done within 28 days of the change in location.

Prior to March 2017, any right to sue that comprised an asset of a bankrupt’s estate could only be litigated by the trustee of the bankrupt. The inability of a trustee to assign a bankrupt’s cause of action resulted in many such actions not being litigated due to factors such as a lack of resources. This position changed through the insertion into the Bankruptcy Act 1966 (Cth) in Schedule 2 of the Insolvency Practice Schedule (Bankruptcy), which expressly permits a trustee to assign to a third party any right to sue that is held by of a bankrupt estate (see section 100-5).

This month at Business Breakfast Club, we discussed asset protection strategies and transactions which are voidable by a Trustee in Bankruptcy. There are a number of asset protection strategies to consider, particularly when carrying on a business, and there is no one perfect strategy. BAL Director, Katie Innes shared some of her insights on the topic. In addition to discussing some of the more common asset protection strategies Katie touched on:

Voidable Transactions

How far do liquidators’ powers to demand documents for public examinations extend? Which documents can they request and from whom can they request them?

In this week’s TGIF, we consider these questions in the context of the recent case of Re Cathro [2018] FCA 1138.

BACKGROUND

Section 37A can be used by future, contingent and prospective creditors to recover assets, meaning the transferor need not be indebted at the time of the transfer.

Recovering assets from a debtor is usually done via the recovery provisions in the Corporations Act 2001 (Cth) or theBankruptcy Act 1966 (Cth), but there is another option, at least in New South Wales, which offers creditors, insolvency practitioners and any prejudiced parties a useful alternative. A recent case demonstrates its advantages (Lardis v Lakis [2018] NSWCA 113; Clayton Utz acted for the successful creditor).

The question in Pleash (Liquidator) v Tucker [2018] FCAFC 144 (29 August 2018) was whether financial documents of a discretionary trust ought to be produced for the purpose of a liquidator investigating the ability of an examinee (and former director of the company) to satisfy any judgment debt that may be obtained against him.

Summary

Parties that withhold from serving a Statement of Claim and then seek an extension of time to do so, without a 'good reason' for an extension being granted, run the risk of the claim not being renewed and being dismissed in its entirety.

This is a lesson learned the hard way by a liquidator in three recent concurrent, interrelated proceedings in the Supreme Court of Queensland.

Background to the claims

This week’s TGIF examines a recent decision of the New South Wales Court of Appeal in Hosking v Extend N Build Pty Limited [2018] NSWCA 149, which considered whether payments made by a third party to an insolvent company’s creditors could be recovered by the liquidator as unfair preferences.

What happened?

The two limbs of the defence to an unfair preference claim under section 588FG(1)(b) and (2)(b) of the Corporations Act have separate work to do.

In a useful decision for liquidators and the insolvency industry, the WA Court of Appeal has clarified the nature of the tests creditors need to satisfy to maintain a defence to a liquidator's unfair preference claim in section 588FG(1)(b) or (2)(b) of the Corporations Act (White & Templeton v ACN 153 152 731 Pty Ltd (in liq) & Anor [2018] WASCA 119).