The recent Federal Court of Australia decision in Yu v STX Pan Ocean Co Ltd (South Korea), in the matter of STX Pan Ocean Co Ltd (receivers appointed in South Korea) [2013] FCA 680, highlights that the Court will be reluctant to grant additional relief to a foreign representative under the Cross Border Insolvency Act 2008 (Cth) where the additional relief sought would adversely affect the rights of creditors.
Facts
The recent Australian Federal Court decision of Yu v STX Pan Ocean Co Ltd (South Korea) in the matter of STX Pan Ocean Co Ltd (receivers appointed in South Korea) [2013] FCA 680 has the effect of allowing the arrest of a ship in Australia, despite the operation of the Cross Border Insolvency Act 2008 (Cth) which incorporates the United Nations Model Law on cross border insolvency into Australian law.
The first significant decision1 under the Australian Personal Properties Securities Act 2009 has followed New Zealand and Canadian law.
The case involved competing claims by a general security holder and a lessor to three civil construction vehicles located in the Northern Territory.
The relationship between the parties
Our September 2012 insolvency update featured the article "Disclaiming Landlord's Interest in a Lease - an Australian Perspective". This article discussed the Victorian Court of Appeal's ruling that section 568(1) of the Corporations Act 2001 (Cth) (similar to our own section 269 of the Companies Act 1993 (NZ)) allows a liquidator to exercise his power of disclaimer to extinguish the leasehold estate of a tenant.
A creditor of a company subject to a Deed of Company Arrangement (DOCA) was recently successful in seeking termination of the DOCA by the court. As a result of the company's non-compliance with the DOCA, the majority of creditors resolved to extend the term of the DOCA and increase the amount to be paid by the company. The applicant creditor alleged that the DOCA should be terminated because the company had failed to make payment in accordance with it, and the variation had not taken effect.
The Court made an order terminating the DOCA on the grounds that:
There is a recognised ambiguity in the transitional provisions of the Personal Property Securities Act 2009 (Cth) (PPSA),relating to the issue of whether an ‘umbrella agreement’, governing the supply of goods on retention of title (RoT) terms entered into prior to 30 January 2012, will be an effective transitional security interest.
In the matter of Maiden Civil (P&E) Pty Ltd; Richard Albarran and Blair Alexander Pleash as receivers and managers of Maiden Civil (P&E) Pty Ltd & Ors v Queensland Excavation Services Pty Ltd & Ors [2013] NSWSC 852
Overview
Summary
Dispute is one of priority, not ownership.
The first judgment regarding a major Personal Property Securities Act ("PPSA") priority dispute between a bank with a perfected "General Security Agreement" and an equipment owner with an unperfected "PPS Lease" has been handed down.
The decision in Richard Albarran and Blair Alexander Pleash as receivers and managers of Maiden Civil (P&E) Pty Ltd & Ors v Queensland Excavation Services Pty Ltd & Ors highlights three key issues for the insolvency industry:
Summary