News & Analysis as of

Liquidation Australia

White & Case LLP

Schemes of Arrangement in Australia

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A creditors' scheme of arrangement ("Scheme") can be a powerful restructuring tool implemented to achieve a variety of outcomes for a business, ranging from deleveraging or a debt-to-equity conversion to a merger and/or issue...more

K&L Gates LLP

Equitable Subrogation and "Controllers" for the Purposes of the Corporations Act 2001 - Can a Lawyer be a "Controller"?

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In Bolwell & Anor v NWC Finance Pty Ltd & Ors [2024] VSC 30, the Supreme Court of Victoria clarified that a lawyer will not be a "controller" of property within the meaning of section 9 of the Corporations Act 2001 (Cth) (the...more

International Lawyers Network

Bankruptcy, Insolvency & Rehabilitation Proceedings in Australia (Updated)

This guide offers an overview of legal aspects of bankruptcy, insolvency, and rehabilitation in the requisite jurisdictions. It is meant as an introduction to these marketplaces and does not offer specific legal advice....more

Jones Day

Australian High Court: No Statutory Set-Off Against Unfair Preference Claims

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In Short - The Situation: Historically, creditors pursued by liquidators under the unfair preference regime could rely on a statutory set-off as a defence to the claim, reducing or eliminating their liability to repay...more

K&L Gates LLP

Ding Dong – Set-Off is Gone: Absolutely Set-Off is Definitely No Longer Available as a Defence to an Unfair Preference Claim:...

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The High Court of Australia in Metal Manufactures Pty Limited v Morton [2023] HCA 1 has confirmed the view of the Full Court of the Federal Court of Australia that the "set off" defence under section 553C of the Corporations...more

Jones Day

First in Line in Australia: Resolving Competing Priorities Regimes When Winding up Companies in a Partnership

Jones Day on

In Short - The Situation: When winding up a company, liquidators must distribute any surplus funds following the satisfaction of any secured debts. The Corporations Act 2001 (Cth) contains a regime which provides that...more

Jones Day

Stopping the Phoenix From Rising: Australian Court Provides First Guidance on Creditor-Defeating Dispositions

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Background - In February 2020, the Corporations Act 2001 (Cth) ("Act") was amended to add a new class of voidable transactions for companies that are being would up known as "creditor-defeating dispositions". This change was...more

International Lawyers Network

Bankruptcy, Insolvency & Rehabilitation Proceedings in Australia

KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER AUSTRALIAN LAW - Companies - Corporate insolvency in Australia mostly involves a company being placed in liquidation or administration. ...more

Jones Day

After a Peak Comes the Fall: Australian Federal Court Rejects "Peak Indebtedness Rule"

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A Refresher: Running Account Defence and Peak Indebtedness Rule - The Full Court's decision was an appeal from a first instance judgment, in which the liquidators for Gunns Limited ("Gunns") successfully argued that 11...more

K&L Gates LLP

Halifax Update: "Unique" Joint Sitting of Trans-Tasman Courts

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A joint hearing between the Federal Court of Australia (FCA) and the High Court of NZ (NZHC) has broken new ground. In proceedings brought by the liquidators of Halifax Investment Services Pty Ltd (In Liquidation) (Halifax...more

K&L Gates LLP

Much Ado About Vesting: Federal Court Clarifies Vesting Rule for Security Interests Granted by Companies That Have Successfully...

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The Federal Court has today sensibly ruled that security interests do not vest in the company grantor simply because the company had at some time previously been in liquidation, administration or subject to a deed of company...more

Jones Day

Back on Top: Australian Court Affirms the "Peak Indebtedness Rule" in Unfair Preference Claims

Jones Day on

The Situation: When determining and quantifying unfair preference claims in Australia, does the Corporations Act permit liquidators to value transactions forming part of a single "continuous business relationship" (such as a...more

Jones Day

To Appeal or Not to Appeal? Liquidators Could Face Personal Costs Orders

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The Situation: Should liquidators be personally liable for the costs of unsuccessful appeals, without an entitlement to reimbursement by the company or its creditors in relation to those costs? The Conclusion: The general...more

Jones Day

Double Trouble: Court Advises Liquidators to Reject $905 Million Proofs of Debt

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The Situation: A liquidator can reject a "double proof" for what is, in substance, the same debt as another accepted proof of debt. The Question: When are liquidators justified in rejecting what could arguably be a double...more

Jones Day

Federal Court of Australia Finds Liquidator's Breach of Duty Claim Against Directors of Holding Company Valid

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The Situation: The question in Termite Resources NL (in liq) v Meadows, in the matter of Termite Resources NL (in liq) (No 2) [2019] FCA 354 was whether, in circumstances where the strategic, managerial and major operational...more

K&L Gates LLP

Federal Court Grants Electronic Notice Application

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On 27 March 2019, the Federal Court of Australia delivered an important decision demonstrating the Court's willingness to assist liquidators to streamline the procedural aspects of liquidations using technology with the aim...more

K&L Gates LLP

Eye of the Phoenix

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What is illegal phoenix activity and why is it a problem? Recent studies have shown that illegal phoenix activity is rife. It has resulted in direct costs to businesses, employees and the Government of $2.85 billion to $5.13...more

Jones Day

Australian Court Directs Receivers to Pay Priority Creditors of Company in Liquidation

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The Federal Court of Australia rules that receivers appointed to a company in liquidation are entitled to pay employee entitlements and fees. In Kirman v RWE Robinson & Sons Pty Ltd (in liq), in the matter of RWE Robinson...more

Hogan Lovells

Court of Appeal overturns Hamersley Iron v. Forge Group Power – set off rights in liquidation restored

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In July 2017, we wrote about the case of Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed), in which the Western Australian Supreme Court held that rights of set off...more

Jones Day

(Mighty) River Runs Dry: Australian High Court Rules "Holding" DOCAs Are Valid

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The Situation: The statutory moratorium period for voluntary administrators to restructure an insolvent company often is too short to find a solution. Administrators frequently utilise "holding" deeds of company arrangement...more

K&L Gates LLP

Set-Off Under Section 553C - It Forges On

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On 21 September 2018, the Supreme Court of Western Australia Court of Appeal delivered the eagerly anticipated decision in Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (In Liquidation) (Receivers and Managers...more

Jones Day

Ask and You May Receive: Equitable Liens, Administrators and Court Directions in Australia

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The Background: The administrators of an Australian auction house and gallery business applied to the Federal Court of Australia for directions to recover in excess of $1 million in fees and costs incurred with respect to...more

Patterson Belknap Webb & Tyler LLP

Chapter 15: Decision Reviews Jurisdictional Issues and Bankruptcy Code Section 109

In a recent decision, In re B.C.I Fins. Pty Ltd. (In Liquidation), No. 17-11266, 2018 Bankr. LEXIS 1217 (Bankr. S.D.N.Y. Apr. 24, 2018), Judge Sean Lane granted a chapter 15 petition after rejecting a challenge to...more

K&L Gates LLP

Court of Appeal Finds the Missing Linc

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On 9 March 2018, in what was a highly anticipated judgment for many liquidators, the Queensland Court of Appeal reversed the controversial first instance Supreme Court decision in the matter of Linc Energy Pty Ltd (In...more

Jones Day

Judicial Guidance about "Perfection by Possession" under Australia's Personal Property Securities Act

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The Federal Court of Australia has provided judicial guidance about what constitutes taking possession by seizure under the Personal Property Securities Act 2009 (Cth) ("PPSA"). Knauf Plasterboard Pty Ltd v Plasterboard West...more

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