Just because a liquidator asserts you have received an unfair preference, does not necessarily mean you have or that there are no potential defences available to you.

Since the landmark decision in Re Solfire Pty Ltd (In Liq) (No. 2) [1999] 2 Qd R 182, the Queensland Supreme Court has often marched to its own tune when reviewing applications for insolvency practitioner remuneration and disbursements. In two related decisions arising from the insolvency of LM Investment Management and managed investment schemes of which it is responsible entity, the Court has now turned its attention to the controversies in this area over proportionality and access to trust assets with which its counterparts in New South Wales have grappled over the last 18 months.

On 1 September 2017, the remaining parts of the new Insolvency Practice Schedule (IPS) introduced by the Insolvency Law Reform Act 2016 (Cth) as Schedule 2 of the Corporations Act 2001 (Cth) (Corporations Act) commenced operation, including the provisions relating to "funds handling" contained in Division 65 of the IPS. These provisions apply to all "external administrations"1. including those that commenced prior to 1 September 20172.

This week’s TGIF considers Ziziphus Pty Ltd v Pluton Resources Ltd (Receivers and Managers Appointed) (in liq) [2017] WASCA 193, where the Court considered the impartiality and independence of liquidators.

BACKGROUND

Factoring agreements are very popular with subcontractors and suppliers in the construction industry, assisting cash-flow by providing a line of credit against accounts receivable. However, like any financial product, they can present complexities, pitfalls and at times surprises when pursuing debt recovery and enforcement action. 

Where a subcontractor is factoring its debts:

Australia’s restructuring landscape has changed significantly in recent weeks on two fronts. One of the changes arises from the safe harbour and ipso facto reforms to Australia’s insolvency laws receiving royal assent on 18 September 2017. The second event arose rather more unexpectedly from the Federal Court decision of Re Korda, in the matter of Ten Network Holdings Pty Ltd (Administrators Appointed)(Receivers and Managers Appointed) [2017] FCA 914 (Ten Decision).

The new section 588GA of the Corporations Act 2001 (Cth) (Act) provides a “safe harbour” from insolvent trading claims for directors who, when suspecting a company may be or is insolvent, start developing a course of action that is reasonably likely to lead to a better outcome for the company.

Hughes v Pluton Resources Ltd [2017] WASCA 213

This case concerned the application of the Personal Property Securities Act 2009 (Cth) (the PPSA) to funds held by a company in liquidation following the termination of a DOCA. In the course of its decision, the Court considered the meaning of various provisions of the PPSA, including:

The Boart Longyear decisions confirm that class constitution remains a critical issue for review when pursuing creditors' schemes of arrangement.

The New South Wales Court of Appeal has recently confirmed the circumstances in which companies seeking approval of schemes of arrangement will be required to convene separate meetings for different classes of creditors.

Class constitution: key principles

Following a suite of recent reforms to Australian insolvency laws, liquidators are now able to assign rights to sue, conferred on them personally by the Corporations Act. The new power to assign is broad. It appears that the implications of the power will need to be clarified by the judiciary before they are fully understood.

In this article, we look at the issues that arise from these legislative amendments along with the opportunities created.