Insolvency & Restructuring

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

When will a liquidator be the subject of a public examination?

On its face a liquidator is fair game for public examination under section 596A of the Corporations Act 2001 (Cth)(Act). They are officers of the Company to which they are appointed, and section 596A provides for mandatory examination of a company’s officers if a request is made by an eligible applicant. And even under section 596B they clearly have (or should have) information about the examinable affairs of the company – so how could the liquidator resist a summons? [...]  READ MORE →

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

A recent decision of the Federal Court in which liquidators were granted an extension of the usual limitation period for bringing voidable transaction claims under the Corporations Act 2001 (Cth) (Act), provides useful guidance about the circumstances in which an extension of time for voidable claims is likely to be granted.

In McCann v Mawson Restructures and Workouts Pty Ltd, in the matter of Walton Construction (Qld) Pty Ltd (in liq) [2016] FCA 1152, the liquidators of two related construction companies sought a six month extension of the period within which any applications could be made pursuant to section 588FF of the Act in respect of voidable transactions. [...]  READ MORE →

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

More evidence of the risk of serving documents by post can be found in the decision of Justice Black in the Supreme Court of NSW in the matter of Shaolin Temple Foundation (Australia) Ltd [2016] NSWSC 804. This was a dispute about whether or not a creditor’s statutory demand had expired prior to the filing of the application to set it aside.

Failing to file an application within 21 days of service of a creditor’s statutory demand is fatal to the Court’s jurisdiction to set it aside. In this case, the demand was served by post, and there was competing evidence arising from a mail tracking system and the records of Australia Post, compared with the system of mail collection of the debtor and specific evidence of an employee of the debtor as to when the demand arrived. [...]  READ MORE →

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

In a recent decision the NSW Supreme Court dismissed an application made to set aside a creditor’s statutory demand on the basis that the creditor had applied funds recovered after issuing the demand towards a different debt and not that referred to in the demand.

In the proceedings Geitonia Pty Ltd (Geitonia) sought to set aside a statutory demand issued to it by Huizhong Investment Group Pty Ltd (Huizhong) in respect of an amount of $2,421,417.43 initially owed by Geitonia to Westpac Banking Corporation (Westpac) for a loan advanced to Geitonia by Westpac. The amount owing to Westpac for the loan was subsequently paid by Huizhong to Westpac in return for transfer to Huizhong of Westpac’s first registered mortgage over a property owned by Geitonia. [...]  READ MORE →

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

The recent decision of Hakea Holdings Pty Ltd v Denham Constructions Pty Ltd [2016] NSWSC 1120 provides an example of when it may be possible to stay an adjudication determination issued under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act), on the basis that the party holding the determination may be unable to repay the determination amount in due course due to insolvency. [...]  READ MORE →

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

A recent decision of the New South Wales Supreme Court confirms that the protection given to company directors in section 440J of the Corporations Act 2001 (Cth) (Act) in respect of non-enforcement of director guarantees of company liabilities during administration does not apply to proceedings commenced prior to the administration.

Section 440J of the Act provides that during administration of a company, a guarantee of a liability of the company cannot be enforced against a director, spouse or relative of a director, and a proceeding in relation to such a guarantee cannot be begun. The purpose of the provision is to ensure that directors are not discouraged from appointing an administrator because of the threat of personal guarantees of company debt being enforced against them. [...]  READ MORE →

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

In a recent case the Federal Court of Australia granted recognition to a US bankruptcy proceeding for the purpose of administration and realisation of assets located in Australia.

The application for recognition was made under the Cross Border Insolvency Act 2008 (Cth) (Act) pursuant to which the UNCITRAL Model Law on Cross-Border Insolvency is in force in Australia.

To obtain recognition under the Act and Model Law a foreign insolvency proceeding must be either a foreign main or foreign non-main proceeding. A foreign proceeding will fall within one of these categories if the insolvent debtor’s centre of main interests, or any place of operations where the debtor carries out a non-transitory economic activity with human means and goods or services, is located within the State where the foreign insolvency proceeding is taking place. [...]  READ MORE →

It is important for a liquidator to ensure that all possible creditors, of a company in liquidation, do not wish to lodge a proof of debt, before they proceed to finalise the liquidation.

In the matter of J A Westaway Pty Ltd (in liquidation) [2016] NSWSC 868 the Supreme Court held that a liquidator was personally liable for the costs of a creditor’s application.

The creditor had applied for an interim order against the liquidator, to restrain the liquidator from holding the final meeting of members and creditors of the company.  In an earlier judgment the Court found that on the balance of convenience the meeting should be restrained, due to the substantial proof of debt lodged by the creditor. [...]  READ MORE →

The process whereby directors can appoint a voluntary administrator to a company by resolution is set out in a straightforward manner in Part 5.3A of the Corporations Act.   A majority of directors must resolve, at a meeting of the board, that the company is insolvent or is likely to become insolvent.  In fact the procedure is so straightforward that there are relatively few cases which examine whether all aspects of the procedure were followed in a given situation.  One recent Supreme Court decision serves as a timely reminder that the Court is empowered to invalidate an appointment if it concludes that the procedure was not properly followed. [...]  READ MORE →

One of the major frustrations for clients of law firms is the uncertainty surrounding how much they will end up spending on a matter.  This is just as true for large corporate clients as it is for individuals.

Believe it or not, it is a frustration for us as well!

Whilst it is possible to determine with accuracy the cost involved in some of the work we do (for example, the drafting of wills and sale of business agreements), even that work can go in unexpected directions.

Business and family life is complex and ever-changing, so it is no surprise that a “one size fits all” approach to legal issues just doesn’t work. [...]  READ MORE →