This week’s TGIF focuses on themes that are emerging as Australia moves to an economic recovery phase and sees the end of government intervention to prevent insolvencies.

Key takeaways

Commercial landlords are exposed to a range of risks from the economic and social consequences of the COVID-19 pandemic. One new risk to be confronted will come from the increased prevalence of rental deferrals and interaction with the Australian insolvency regime over ‘unfair preferences’.

Why is rent ‘protected’ in normal trading conditions?

Administrators unsuccessfully argued that rent incurred during the administrators’ statutory “no personal liability” period was an unsecured debt which would not enjoy priority in the event the relevant companies went into liquidation.

Key takeaways

The NSW Supreme Court has given a Landlord leave to commence proceedings against a company for rent and make good costs arising after the date of the DOCA.

BACKGROUND

Two’s company when it comes to debt funding. Surely, three makes things a little crowded? It doesn’t have to be that way.

The Federal Court has recently handed down a decision that clarifies the power of receivers to administer trust property under a debenture. In Benton, in the matter of Mackay Rural Pty Ltd (Receivers and Managers Appointed) [2014] FCA 1285, the Federal Court confirmed that section 420 of the Corporations Act 2001 (“the Act”) confers upon receivers a power to dispose of trust property, provided that this is necessary for the purpose for which they have been appointed.

FACTS

In the case of Bosi Security Services Ltd v Wright [2013] WASC 431, in which the court granted an interlocutory injunction preventing the sale of land by receivers despite acknowledging that the applicants’ case under the Trade Practices Act and Australian Consumer Law was not a strong one and had obvious deficiencies.

Facts

This is the twenty-ninth in our series of General Counsel Updates which aim to summarise major developments in key areas.

The transition from 2009 to 2010 sees some significant legislative chapters closing, notably the Companies Act 2006, Rome I and II, the Banking Act 2009 and the Lisbon Treaty.

The High Court has ruled in the case of Goldacre (Offices) Limited v Nortel Networks UK Limited (in administration) [2009] that rent for premises that continue to be used for the beneficial outcome of an administration must be paid as an expense of the administration. This decision confirms that the court has no discretion in these circumstances and that it does not matter if only part of the premises are being used. This contrasts with the position where a landlord wishes to take action against a tenant in administration such as bringing forfeiture or injunction proceedings.