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Officer or Not? – Australian Security Investments Commission v King

By Ellen Ferris, a Solicitor in Matthews Folbigg’s Insolvency, Restructuring and Debt Recovery Group.

This week the High Court in Australian Securities and Investments Commission v King & Anor [2020] HCA 4, decided an appeal from the Supreme Court of Queensland concerning the construction of the word ‘officer’ in section 9 of the Corporations Act 2001 (Cth).

This much anticipated decision has provided clarity as to the construction of the term; a decision which will be well received by ASIC. [...]  READ MORE →

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Creditor’s Requests – When is it unreasonable?

By Bonnie McMahon, an Associate in Matthews Folbigg’s Insolvency, Restructuring and Debt Recovery Group.

Many external administrators and trustees will have been receiving requests from creditors under section 70-45 of the new insolvency practice schedules, which were first introduced into the Corporations Act and Bankruptcy Act in September 2017.

This new provision allows creditors to request information, reports or documents from an external administrator or trustee.

At this stage, there is not a lot of guidance as to when external administrators and trustees can refuse to comply with these requests, especially as the scope of section 70-45 has only been considered by the Court in one reported case to date. [...]  READ MORE →

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Company Records? I could tell you, but I would have to go to gaol… ?

By Chloe Howard of Matthews Folbigg Lawyers, a lawyer in our Insolvency, Restructuring and Debt Recovery Group

A company is presumed to be insolvent if it fails to keep proper financial records (section 588E(4) of the Corporations Act 2001 (Cth)).

But what if you have the records, but providing them might send you to gaol?

This issue was recently discussed in the matter of Substance Technologies Pty Ltd [2019] NSWSC 612.

In this matter, the director refused to respond to a liquidator’s repeated requests for the company’s financial records because he said the records might contain incriminating material.  He couldn’t be certain but “would suspect there could well be.” (at [42]) [...]  READ MORE →

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Creditor’s statutory demand issued pending negotiations is upheld

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

In a recent matter which we acted for the Defendant (In the matter of Precise Training Pty Ltd [2018] NSWSC 1383), we successfully defended an application to set aside a creditor’s statutory demand issued by the Chief Commissioner of State Revenue (“the Commissioner“) against Precise Training Pty Ltd, the Plaintiff.

Facts

The Commissioner issued a number of assessments for payroll tax to Precise Training in 2015 as a member of a larger tax group. Precise Training disputed the assessments and lodged an objection on 10 December 2015. The Commissioner disallowed the objection and proceeded to enter into negotiations for payment of the assessments. [...]  READ MORE →

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AFSA Offence Referral Update

Recent updates to the Alleged Offence Referral to AFSA template now provide for the inclusion of details of any person (individual or corporate) acting on behalf of, or assisting, a bankrupt or debtor. This can include a spouse, child, friend, accountant or lawyer assisting a bankrupt in an informal capacity, as is often the case.

As trustees are aware, they have a duty under section 19(1)(i) of the Bankruptcy Act 1966 to refer to AFSA any evidence of an offence committed by a bankrupt. However, there are often circumstances where it is unclear whether there is sufficient evidence to support an offence referral. AFSA has available a Pre Referral Enquiry (“PRE”) program that is a convenient and efficient way to deal with such matters. PREs can be as simple as emailing AFSA with a summary of the circumstances and suspected offence/s and are particularly useful: [...]  READ MORE →

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CREDITORS AND THE INSOLVENCY LAW REFORM ACT 2016

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

As the 2017 year draws to a close, creditors would be aware that both instalments of the Insolvency Law Reform Act 2016 (“the ILRA”) have come to pass.

What should creditors be aware of under the new regime?

The ILRA is an attempt to reform the insolvency law but also to provide an improvement in the confidence of the public in the overall performance of the trustees and liquidators appointed to the various estates and administrations that are commenced every day. [...]  READ MORE →

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CREDITORS AND THE INSOLVENCY LAW REFORM ACT 2016

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

As the 2017 year draws to a close, creditors would be aware that both instalments of the Insolvency Law Reform Act 2016 (“the ILRA”) have come to pass.

What should creditors be aware of under the new regime?

The ILRA is an attempt to reform the insolvency law but also to provide an improvement in the confidence of the public in the overall performance of the trustees and liquidators appointed to the various estates and administrations that are commenced every day. [...]  READ MORE →

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Disproportionately proportionate – the Sakr remuneration decision overturned

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

A 5 member Full Court of the Supreme Court of NSW Court of Appeal has unanimously overturned the decision of Brereton, J in the much anticipated Sakr Nominees Pty Ltd (In Liquidation) insolvency practitioner remuneration appeal.

Justice Brereton had limited the remuneration of the liquidator, Clifford Sanderson, for work he had undertaken in the final stages of a liquidation, to $20,000 (including GST). This was only a portion of the total remuneration sought to be approved ($63,577.80). In reaching this decision, His Honour relied heavily on the fact that remuneration may be by way of commission (a proportion of assets realised or distributed) rather than time based and a view that in smaller liquidations “questions of proportionality, value and risk loom large, and liquidators cannot expect to be rewarded for their time at the same hourly rate as would be justifiable when more property is available.” [...]  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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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 →