Traill’s 17th Annual Practical Insolvency Conference – a preview

Courts and governments and industry bodies are no doubt trying to have their remaining pending decisions and announcements out in time to be included in the already packed program of the Traill Insolvency Conference on 19-20 March.

Some have succeeded – Amerind, Linc Energy, safe harbour, and the one -year bankruptcy; but for others still pending, time is getting close. 

Those privileged to have their issue listed on the program will know that it will be the subject of robust analysis and explanation by experts before what is always a very well-informed audience.

We have 6 months of safe harbour experience to discuss, with, perhaps, some potential for its rosy marketing thus far to be questioned. Naivety aside, some may recall a prescient warning from a past conference that while those professionals operating in external administration have rules and protections, liabilities in informal workouts are at large,[1] and with safe harbour now potentially dragging the adviser into any claims on the director by the liquidator.

Channel Ten has opened up the range of pre-appointment non-conflictual work for liquidators, that now being the Law. Codes can catch up, with English practitioners soon to announce the outcome of their independence review, along with RITANZ and its new code.

As to ipso facto termination rights, the government may like to release its draft list of exclusions from the law, in order to have a quality debate before an informed audience, thereby, perhaps, dispensing with the need for any further consultation.

Litigation is often a major task of a liquidator or trustee, with the proportionality of the outcome to be managed along the way. A significant analysis of a practitioner’s responsibility is found in Viscariello v Macks, which also explains some fine points about the nature of practitioners’ fiduciary duties. Expert presenters will explain more.

Putting behind us some of the fundamental concerns about the ILRA 2016 changes, there will be a more constructive comment on how it is working in practice – creditor rights, reporting, financial controls, replacements of practitioners; and how the courts are reading the new law, in Network Ten, for one, and more, and how harmonised are our regulators, ASIC and AFSA.

Creditors in insolvency are generally disengaged but FEG is an exception, being now out there seeking to uphold the integrity of the laws and to recover moneys as well, successfully, as it will explain.

The ATO is pursuing more lateral strategies – taking security over a taxpayer’s home, and then selling up if necessary. This may open up work for receivers, or their competitor, the Official Trustee.[2]

Further lateral thinking went into the tax transparency idea that prompts this question: ‘who would lend or deal with a business with $200k in unremitted withholding taxes?’.

Many consider that commercial creditors could do more to look after themselves, and the PPSA is one avenue still rather unused, and is further explained, including the rather complex analysis in Amerind.

ASIC’s presentation – the role of the regulator and government – should prompt some testing questions. As one liquidator explained, given the extent he is funding ASIC, a high level of service in return is expected.

Security over assets is more and more what insolvency is about, as the financiers will explain, unless they are before the royal commission, where, so far, banks’ receivers have not come into focus.

Personal insolvency was around first, as we don’t need to point out, and its fundamentals are required knowledge for any practitioner, even if the law requires only ‘exposure’ for corporate practitioners applying to be liquidators.[3] The session may explain why a director whose business loses $10m of creditors’ moneys can restart the next day, while a bankrupt who loses creditors’ $100k is out for 3 years. Parliamentarians have free entry to this session.

As to paying the bills through recoveries, as the program says, for whose or what benefit are voidable transaction claims brought?

And while bankruptcy law has long dealt with proportionality of remuneration, we may hear why corporate practitioners and their lawyers remain focused on Sakr Nominees and insist on seeking remuneration approvals in the NSW Supreme Court.

Elevated minds will explain Amerind, and the Hamersley Iron appeal, and possibly, if the stars really align, Killarnee.

Then we have administrators incurring credit, often necessary for a successful restructure, but with risks involved.

Strata title insolvency is in fact a source of many an insolvency, such are the fraught relations among people living in a close residential and financial compact.  The topic reminds of the elderly residents of Glenview Home Units who appointed a voluntary administrator when faced with the prospect of high building restoration costs.[4]  Now we have cladding, and building defects, and overseas owners.

Being appointed to an insolvency can be a fraught issue, particularly in the short and often tense time frame involved. Upon then realising there is something amiss, like fictitious ASIC registered directors, what do you do, and who pays?

Sham contracts go back to Sharrment[5] and before, with any interests in property purportedly likewise a sham and void. The forensic advantages of this option will be explained.

The ‘personal anguish and the tragic personal consequences’ of investors in dodgy property and funds management schemes was recently reported in Banksia,[6] with the added delay through laws not designed for prompt resolution. An explanation of the complexities in this area will no doubt inform the design of what is to be a new collective investments regime.

And with Linc Energy scraping in, we may hear whether Queensland’s loss was just a matter of bad timing, or a more fundamental impediment to its, and WA’s, attempt to side-step the law of disclaimer.

More decisions and topics are probably welcome, but time is getting close.

Please contact us if the many oblique references in this report need explanation.

Murrays Legal has no financial or other relevant connection with Traill & Associates.

[1] Hip-pocket injuries in workouts: Accessory liability for bankers and advisers, BFSLA Conference 2006, RP Austin

 

[2] Bankruptcy Act s 18(3)

[3] IPR(C) r 20-1(3)

[4] Crimmins v Glenview Home Units [2001] NSWSC 699

[5] [1988] FCA 179

[6] [2018] VSC 47

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