Suppliers of goods often rely upon retention of title clauses to preserve their goods in the event the purchaser defaults on any aspect of the supply agreement.  However, how enforceable are these provisions when the purchaser enters into administration or liquidation or becomes bankrupt?  What steps can suppliers take to protect their interests in these circumstances?

As concerns about illegal phoenix activity continue to mount, it is worth remembering that the Corporations Act gives liquidators and provisional liquidators a powerful remedy to search and seize property or books of the company if it appears to the Court that the conduct of the liquidation is being prevented or delayed.

When a person is declared a bankrupt, certain liberties are taken away from that person. One restriction includes a prohibition against travelling overseas unless the approval has been given by the bankrupt's trustee in bankruptcy. This issue was recently considered by the Federal Court in Moltoni v Macks as Trustee of the Bankrupt Estate of Moltoni (No 2) [2020] FCA 792, which involved the Federal Court's review of the trustee's initial refusal of an application by a bankrupt, Mr Moltoni, to travel to and reside in the United Kingdom.

It may now be easier for Australian insolvency practitioners to carry out investigations and recover assets located in Hong Kong and in mainland China. On 8 February 2018, and for the first time, the High Court of Hong Kong granted an application for recognition and assistance in that jurisdiction for voluntary liquidators of an entity incorporated in the British Virgin Islands.

Summary

On 24 August 2017, Messrs Park, Olde and Hansell were appointed joint and several administrators of SurfStitch Group Limited. Prior to their appointment, two shareholder class actions were commenced against SurfStitch. The administrators identified 3,313 shareholders who may be potential group members in the class actions.

The High Court will consider the validity of “holding” deed of company arrangements (commonly known as “holding DOCAs”) under the Part 5.3A of the Corporations Act (theAct).

1. Section 90K(1)(aa) of theFamily Law Act1975 (Cth) provides that a court may set aside a financial agreement if the court is satisfied that a party to the agreement entered into the agreement for purposes including the purpose of defrauding or defeating creditors, or with reckless disregard to the interests of the creditors.

In certain circumstances, liquidators may be at risk of personal exposure to costs orders in litigation. 

The court’s approach to the making of costs orders against liquidators depends on (amongst other things) whether the liquidator is a named party to the proceedings, whether the liquidator is commencing or defending proceedings, and whether the liquidator has acted ‘improperly’ or unreasonably in the commencement, maintenance or defence of the action.

Proceedings commenced by the liquidator / company in liquidation

On 19 October 2017, the Bankruptcy Amendment (Enterprise Incentives) Bill 2017 was introduced into Parliament by the Commonwealth Government in order to reduce the default period of bankruptcy from three years down to just one year. The stated objective of the Bill is “to foster entrepreneurial behaviour and reduce the stigma associated with bankruptcy whilst maintaining the integrity of the regulatory and enforcement frameworks for the personal insolvency regime.”