The High Court of Australia is expected soon to hand down its judgment in Lehman Brothers v City of Swan. It is likely that this judgment will definitively determine whether Deeds of Company Arrangement under Pt 5.3A of the Corporations Act (“the Act”) are able to force creditors to give releases to third parties.
Insolvency Partner, Amanda Banton and Lawyer, Anna MacFarlane summarise the High Court’s judgment delivered on 14 April 2010 in which the Court held, as the Full Court of the Federal Court held in first instance, that, properly construed, Pt 5.3A of the Corporations Act (Cth) 2001 does not permit third-party releases within DOCAs.
The important features of the judgment:
The significant increase in the number of companies passing into liquidation in the current economic climate has focussed Courts on whether they can summons a non-resident. Dispute Resolution Associate, Justin Le Blond, examines the position.
There were six substantive civil decisions released by the Court of Appeal this week. There were many criminal decisions released.
In Wall v. Shaw, the Court determined that there is no limitation period to objecting to accounts in an application to pass accounts in an estates matter. A notice of objection is not a “proceeding” within the meaning of the Limitations Act, 2002.
“...we consider that the section means what it says, and that there is not much point in trying to paraphrase it.” (Supreme Court in Thompson v CIR)
In our October 2010 insolvency legal update, we reviewed the case of South Canterbury Finance Ltd v Nielsen, where the Court found in favour of second mortgagee, SCF, on the interpretation of a deed of priority. That case was appealed successfully to the Court of Appeal by the first mortgagee, ASB. This update provides a brief review of the Court of Appeal's reasoning.
A recent judgment in the Wellington High Court makes receivers, liquidators – and, potentially, the directors of companies in receivership and liquidation – personally liable for GST on the sale of mortgaged properties even where the mortgagee is not GST registered.1
The decision is being appealed and may be overturned as – in our view – it rests upon an unusual interpretation of the law.
Background
Until recently Russian legislation was not familiar with the concept of close-out netting. Although there was no prohibition for market participants to enter into netting agreements, Russian courts would not enforce such agreements in case of bankruptcy. This led to the use of complex structures to avoid the negative consequences of the application of Russian law and was a strong argument in favor of using foreign entities and application of foreign law to derivative transactions.
Section 153 (1)(b)(ii) of the Companies Act 71 of 2008 (the Act) is intended to afford a remedy to affected persons who support a business rescue plan that has been
The section can be broken down into five key elements: