The ‘reviewing liquidator’ was a novel introduction into the law, one of many introduced by the Insolvency Law Reform Act 2016. We look at this in the context of remuneration reviews, noting that ASIC is now extending this to phoenix activity. Given the decision in ASIC v Wily & Hurst, ASIC needs to clearly understand what phoenix misconduct involves. The Cedenco decision is covered, our author saying that court remuneration assessments are trending towards holding practitioners “to a counsel of perfection”.
And we note that the Inspector-General in Bankruptcy is receiving many requests for the exercise of his remuneration role equivalent to a reviewing liquidator, one reason said to be the increasing disengagement of creditors from the process in light of the ILRA “reforms”.
New Zealanders often offer us fresh views on our law, as in a very useful and critical article on the Hamersley Iron decisions, in relation to statutory set-off and mutuality. It seems both the WA courts got it wrong, still relying as they did on “the very concepts and constructs that PPSA was designed to replace”.
The Federal Court’s confirmation that receivers can pay employees’ priority claims under s 561 of the Corporations Act is covered, an important break-through interpretation. This is despite the fact that s 561 is contained in Part 5.6 of the Corporations Act which is headed “Winding up generally”. Chapter 5 needs repeal and replacement.
The duties of directors in the context of approaching insolvency has always been a finely balanced issue, with a thoughtful analysis of the “dance” that directors have to perform attending to the company’s interests in a new safe harbour environment – indeed “the decision to appoint administrators may be in breach of … directors’ duties when other options are available”.
This reminded me of the English judge’s comment that “ceasing to trade and liquidating too soon can be stigmatised as the cowards’ way out.”
A universal principle, that a demand notice under statute must show on its face what is being asked of the recipient, is explained in the context of a deficient s 139ZL notice in bankruptcy.
We also mention climate change in relation to the contingent liabilities of a business and the potential for pre-emptive restructuring protection, and the Senate Environment Committee’s report in relation to accounting for the contingent costs of the rehabilitation of mining projects.
Noting that what we deal with now in the 21st century has usually been dealt with by the profession before, we report that in 19th century England:
- bankruptcy law prohibited the payment out of the estate of “any monies whatever for expenses in eating or drinking of the [trustees] or any of the creditors”, breach of which would cause the trustee to be “disabled for ever” from further work; and
- that the Institute of Accountants demanded reform by way of “increasing the rights of creditors” in allowing them to “demand information from the trustee”, a precursor to today’s Div 70 of the Insolvency Practice Schedules.
Div 70 was covered in the last issue of the Bulletin – the 1st Fleet decision; along with Professor Jason Harris’ insightful review of the latest in the Walton Construction saga; and an article on cryptocurrency as an asset in insolvency.
Michael Murray, Co-editor, Insolvency Law Bulletin