In our September 2012 insolvency update, we reported on Re Willmott Forests Ltd [2012] VSC 29, where the Victorian Court of Appeal found that a leasehold interest in land is extinguished by a liquidator's disclaimer of the lease pursuant to section 568(1) of the Australian Corporations Act 2001 (Cth).
On 11 October 2013, the Trans-Tasman Proceedings regime will come into effect. The Trans-Tasman Proceedings Act 2010 aims to streamline the process for resolving Trans-Tasman civil proceedings, with the intention of reducing costs and improving efficiency in enforcing Australian judgments in New Zealand.
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
It is quite a thing for the law to remove from owners the rights normally associated with ownership and to confer them on receivers.
Which is why, although receivers are allowed considerable discretion in the exercise of their duties, they are also subject to oversight by the courts.
So how much freedom of manoeuvre do they have, and when will the court intervene? We look at a recent decision1 in the Australian Federal Court and consider its relevance for New Zealand insolvency practitioners.
Several issues of far-reaching significance in the world of restructuring and insolvency will be decided by the courts, and by Parliament, this year.
Some have yet to surface but others are already in the pipeline.
We look at what we consider to be the “top five”.
Litigation funding
A director is not absolutely liable for all losses suffered by a company on his or her watch.
So the Court of Appeal has ruled in a recent liquidation dispute.
The context
Rowan Johnston, a former investor and director in NZNet, pumped funds into the company when it ran into difficulties, but found that NZNet’s managing director Stephen Andrews had misled him about the company’s financial position.
On 15 September 2011, he resigned his directorship and a couple of months later, NZNet went into liquidation.
A recent interlocutory decision (Action Media Ltd v Mitchell [2015] NZHC 3121) in ongoing litigation between the liquidators and the former director and shareholder of Action Media Ltd (In Liquidation) gives some guidance on the relationship between the liquidators' powers under section 261 of the Companies Act 1993 and their obligations to discover relevant documents under their control. The defendants had requested discovery from the liquidators of certain correspondence between the liquidators and the IRD, and of pre-liquidation correspondence between the company and
The majority of the Court of Appeal has upheld the High Court decision (see Buddle Findlay's summary here) that the liquidators of Ross Asset Management Limited (RAM) can recover the fictitious profits obtained by Mr McIntosh ($454,047), but not his initial investment ($500,000).
For the first time in New Zealand, the High Court has considered whether a compromise under Part 14 of the Companies Act 1993 can release guarantors of a company's debts. Silverfern proposed a Part 14 compromise to its creditors and, as part of that compromise, the guarantees given by Silverfern's directors and shareholders, Mr and Mrs O'Connor, of Silverfern's debts, would be unconditionally released. The compromise was approved by the required majority but opposed by the plaintiffs.
In Havenleigh Global Services Ltd and FM Custodians Ltd v Henderson, relating to the bankruptcy of David Henderson, the Official Assignee had issued a notice under section 171 of the Insolvency Act to Xero for the provision of company records. Associate Judge Osborne prohibited publication of a ruling about the lawfulness of the notice pending the public examination of Mr Henderson and judgment. The Official Assignee applied for directions allowing publication because the prohibition prevented Xero from commenting on media articles about how it responded to the not