The Supreme Court of Victoria has recently considered whether trust property is subject to the priority regime provided for in section 556 of the Corporations Act 2001 (Cth) (the Australian equivalent of New Zealand's Schedule 7 of the Companies Act 1993).  It also considered whether a trustee's right of indemnity is subject to the obligations of receivers under section 433 of that Act, to pay employee entitlements in priority out of assets subject to a circulating security interest.

Is a “stay of enforcement” of a judgment within the meaning of s 15(2) of the Foreign Judgments Act brought about by s 58(3) of the Bankruptcy Act?

Talacko v Bennett [2017] HCA 15, 3 May 2017

A recent Victorian Supreme Court decision has resulted in the Commonwealth losing priority status for some $3.8m paid to the employees of a collapsed company, due to an unusual gap in the priority regime created under the Corporations Act.

This week’s TGIF considers a decision of the Victorian Supreme Court which examined the merits of appointing special purpose liquidators in circumstances where a creditor was only willing to fund investigations if the appointment was made.

What happened?

In May and June 2016, two registered education and training organisations (together, the RTOs) were placed into liquidation.

Winding up a company when you are the trustee in bankruptcy of the sole director and shareholder can be more complicated than you think.

In State of Victoria v Goulburn Administration Services (In Liquidation) & Ors [2016] VSC 654, the Victoria Supreme Court appointed two partners of Ernst & Young (EY) as special purpose liquidators (SPLs) of two companies, despite EY's involvement in carrying out contractual compliance audits before those companies went into liquidation.

It has been held that automatic set off under s 553C of the Corporations Act 2001 (Cth) precludes companies in liquidation from taking advantage of the summary progress payment regime under the Building and Construction Industry Security of Payment Act 2002 (Vic).

Façade Treatment Engineering Pty Ltd v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247

This week’s TGIF considers Re Akron Roads Pty Ltd (in liq) (No 3) in which the Court held that the liquidators had standing to seek a declaration against an insurer arising from the assignment of rights under a policy.

WHAT HAPPENED?

The previous High Court decision

This week’s TGIF considers State of Victoria v Goulburn Administration Services (In Liquidation) and Ors [2016] VSC 654, in which Special Purpose Liquidators were appointed despite a potential conflict arising from their firm having conducted compliance audits of the companies.

Background

The Supreme Court has confirmed that declarations can be made approving settlement payments and the mere fact that a liquidator has acted on incorrect advice will not preclude a settlement payment being regarded as an expense “properly incurred” for the purposes of s 556(1)(a) of the Corporations Act.

Lewis & Templeton & Warehouse Sales Pty Ltd (in liq) v LG Electronics Australia Pty Ltd & Ors (No 2) [2016] VSC 63

Background