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Fighting Fund Frustrated

By Stephen Mullette a Principal of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

In a not unsurprising decision, a liquidator has been unable to protect the balance of the funds available to him in winding up (described as the “Litigation Fund”) from potentially being made available as security for the defendants’ costs.

In Nucros (WA) Pty Ltd (In Liquidation) v Ultra Plast Pty Ltd (2017) WASC 1, the liquidator was not personally a party to the proceeding, which meant the company was susceptible to a security for costs application, pursuant to section 1335 of the Corporations Act 2001. The liquidator had recovered a preference claim from the ATO and established a Litigation Fund for the purpose of continuing certain proceedings commenced prior to his appointment. The balance of the litigation fund at the time of the security for costs application was approximately $135,000. The defendants sought an order for the provision of $90,000 security. [...]  READ MORE →

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New Costs Procedure in the Federal Court – Important Changes for Insolvency Practitioners

By Bonnie McMahon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

On 25 October 2016 the Federal Court of Australia (“the Court”) released a new practice note relating to costs, entitled the “Costs Practice Note” (“the Practice Note”). It is important for all insolvency and legal practitioners to be aware of this Practice Note, as it will be the main guide for Federal Court judges and registrars when they are considering costs related issues.

The Practice Note makes two things very clear: [...]  READ MORE →

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Special Delivery

By Bonnie McMahon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

The Federal Court has recently considered the effect of special proxies in a judgment which is important for those considering how special proxies operate, both in corporate and in personal insolvency. The decision also disallowed retrospective approval of remuneration in bankruptcy, making only prospective fee approval available for trustees.

On 16 December 2015, a bankruptcy trustee held a creditor’s meeting (“the Creditor’s Meeting”), with the main purpose of considering and passing a resolution approving his remuneration. At this meeting the Trustee’s remuneration was approved, on the basis of certain special proxies in favour of the chairperson and minutes secretary. [...]  READ MORE →

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Payment claims, reference dates and adjudication determinations – the High Court in Southern Han Breakfast Point (In Liq) v Lewence Construction

By Georgina King a Senior Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

On 21 December 2016, the High Court of Australia handed down its decision in Southern Han Breakfast Point Pty Ltd (In Liquidation) v Lewence Construction Pty Ltd [2016] HCA 52.

In the decision, the High Court has overturned the previous decision of the Supreme Court of New South Wales Court of Appeal and held that an adjudication determination arising from a payment claim purportedly served pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) (“Act”) after purported suspension of payment and termination of a construction contract is void by reason of there being no reference date available in respect of the claim. [...]  READ MORE →

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Supreme Court of NSW launches an Online Court

By Hayley Hitch, a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

The Federal Courts, for some time now, have provided an online court system known as the e-Court portal through the Commonwealth Courts Portal system. The e-Court portal is used to allow parties in proceedings to correspond with the Court and the parties of the relevant proceedings to communicate without attendance at Court required. It is a system that started as an initiative to reduce costs and unnecessary time incurred for both the Court and parties/legal representatives to deal with administrative matters outside of the Courtroom. [...]  READ MORE →

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Wrong name right party – the High Court’s decision in Simic

By Georgina King a Senior Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

The High Court has handed down an important decision regarding the impact of a mistake in the naming of the intended beneficiary of performance bonds issued by a bank.

In its appeal decision handed down on 7 December 2016 in Simic v New South Wales Land and Housing Corporation [2016] HCA 47, the High Court of Australia has held that while performance bond documents naming a party incorrectly could not be construed (as held previously) as referring to the right party, it was appropriate to order that the security instruments be rectified so that they refer to the correct name and are able to be relied upon on that basis. [...]  READ MORE →

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When is a PPS registration effective?

By Hayley Hitch, a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

A Personal Property Security (“”) registration is effective from the date of registration. However, many variables or factors may invalidate a registration and therefore cause issue in respect of priority placement between security interests.

In the matter of Accolade Wines Australia Limited and Ors [2016] NSWSC 1023 (“Accolade”), the Plaintiffs registered a security agreement on the PPS register against various grantors. However, the Plaintiffs registered the security interest under the name and ABN of each grantor but failed to register the agreement under the ACN of the various grantors. By failing to register the PPS under the ACN of each relevant company, this invalidated the PPS registration. [...]  READ MORE →

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The Administrative Appeals Tribunal and the Bankruptcy Act – How far does its jurisdiction extend?

By Bonnie McMahon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

In the recent Administrative Appeals Tribunal (“the Tribunal”) decision of Lavin and Inspector General in Bankruptcy [2016] AATA 798 (“Lavin”), the Inspector-General in Bankruptcy (“Inspector-General”) has successfully argued that the Tribunal does not have the jurisdiction to:

  • review a decision of a Trustee in Bankruptcy (“the Trustee”) in relation to an assessment of the bankrupt’s income and contributions, when the Inspector-General refused to conduct a review of the Trustee’s decision under section 139ZA(5) of the Bankruptcy Act 1966 (Cth) (“the Act”): and
  • determine that a refusal made by the Inspector-General to conduct a review of the Trustee’s decision under section 139ZA(5), is as a matter of fact a different decision or decisions than that stated by the Inspector-General.

The Applicant in Lavin was a bankrupt seeking a review of the decision her Trustee had made, in relation to her income and contributions under section 139Y of the Act. The Applicant had previously sought an internal review of the Trustee’s decision by the Inspector-General. The Inspector-General had refused to undertake this review under section 139ZA(5), and as a result the Applicant had applied to the Tribunal seeking a review of the Inspector-General’s decision under section 139ZF(b). [...]  READ MORE →

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It’s personal – Bankruptcy and Life Insurance

By Andrew Ng an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

It is a long standing principle that a bankrupt should not be deprived of a right to recover compensation for injury or wrong done to the bankrupt as it would be “unjust and harsh that the estate of the bankrupt and the participating creditors should be swelled and advantaged by a wrong to the person or reputation of the bankrupt” (Moss v. Eaglestone [2011] NSWCA 404 per Allsop P at [64]) . This principle underpins the intention of the statutory framework set out in section 60(4) and section 116(2)(g) the Bankruptcy Act 1966 (Cth) (“the Act”). [...]  READ MORE →

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Insolvency set-off trumps building and construction security of payments regime

By Georgina King a Senior Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

Three recent Supreme Court cases, in 2 different States and the Australian Capital Territory, have dealt with insolvent companies seeking to rely upon Building and Construction Industry Security of Payment legislation to recover amounts from parties that have significant set off claims and grounds to dispute the amounts sought to be recovered.

The judgments and comments made by the Courts in each case make it clear that notwithstanding the ordinary operation of the security of payment provisions, which are designed to provide for quick interim payment of progress claims by construction companies, the provisions are not to be interpreted as providing for amounts to be recovered by currently or soon to be insolvent companies without any right of set off or challenge to the debt by the opposing party being taken into account. [...]  READ MORE →

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The Dog ate my Act

By Stephen Mullette a Principal of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

The words “a long and somewhat unfortunate history” in a judgment generally refers to litigation which the Court is suggesting ought not to have been undertaken, or at least which ought not to have been conducted in the manner the Court has observed. In Young v Cooke [2016] FCA 1215, it was probably both. In this case, the Federal Court has used the “Slip Rule” to take away an act of bankruptcy committed under the Bankruptcy Act 1966 (Cth), and give a judgment debtor one last chance to comply with a bankruptcy notice. [...]  READ MORE →

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What’s in a Name?

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

A person goes bankrupt.  It’s a common occurrence.  In fact there were 17,202 bankruptcies across Australia in the 2015/16 Financial Year, on average, more than 47 people going bankrupt each and every day.  That’s 17,202 new files opened by Bankruptcy Trustees, be it by the Official Trustee or private Trustees who are all governed by statutory and professional requirements.

The Trustee initially has only the information provided to him or her by the Bankrupt, or the creditor who obtained the Court order, to commence an investigation as to the financial affairs of the Bankrupt.  It is from this information that the Trustee assesses what assets are available to be realised for a dividend payment to creditors. [...]  READ MORE →