Australian High Court – special leave sought in bankruptcy Ponzi case – 139ZQ
An application for special leave to appeal to the High Court[1] has been made in a bankruptcy matter involving a section 139ZQ notice demanding payment of $12.5m in respect of a failed Ponzi horse race betting syndicate. The Full Federal Court upheld a trial decision that liability under s 139ZQ Bankruptcy Act could be pursued […]
Insolvency services for sale
There seem to be some rather unhappy insolvency practitioners at the moment bemoaning the low levels of insolvencies – yes, unhappy because more businesses and individuals are, apparently, remaining financially stable – with the prospect of an ‘insolvency tsunami’ having passed, and speculating when an ‘uptick’ (and other such positive terms) in the ‘insolvency market’ […]
Trustee “entirely blameless” in his dealings with a mentally infirm bankrupt
While there is now greater training available in dealing with those suffering mental illness for professionals working in debt counselling and bankruptcy,[1] it remains the case that no-one should be making a medical diagnosis or offering any purported medical advice. In a recent decision, a woman who had been made bankrupt claimed that her trustee […]
Why do we have preference recoveries in insolvency?
In finding that the ‘peak indebtedness rule’ did not in fact exist, the Full Federal Court[1] in Badenoch v Bryant has also questioned the central aspect of its purported purpose that “if the continuing business relationship commenced at the beginning of the running account (some years prior to 2012), questions may arise as to whether […]
Electronic delivery of documents in insolvency law
Some belated concern has been raised about the potential for new corporate insolvency law allowing a winding up demand to be served on a company by email, thereby creating the groundwork for a winding up order against the company. [1] See Mark Wellard’s article in the Insolvency Law Journal. ‘Belated’ because email service of bankruptcy […]
Insolvent trading convictions set aside on mental health grounds
Following convictions and imprisonment for insolvent trading arising from the 2009 collapse of Kleenmaid, its founder, Andrew Young, has succeeded on appeal but on one ground only, that the trial judge should have put to the jury the question of the mental fitness of Young to stand trial. R v Young [2021] QCA 131 (15 […]
Licensing of insolvency practitioners – decision making principles from New Zealand [updated post 13 June 2021]
Mr Damien Grant, the New Zealand insolvency practitioner who successfully challenged RITANZ’s decision to deny him the right to practice as a liquidator, is now registered, according to the RITANZ website and Stuff. See Controversial liquidator Damien Grant wins battle for career | Stuff.co.nz 14 May 2021. RITANZ’s reasons for denial were the subject of […]
Why has the Australian government not yet decided on any further insolvency law changes for small business?
Australia MSE insolvency reform process seems to have halted, perhaps because of a poor reception to its January 2021 small company reforms, described as a ‘chimera of restructuring reform.’ Although consultation has proceeded on further small business reforms, including in personal insolvency, nothing has been announced. We suggest a range of reasons for this – […]
Employees’ loss of FEG redundancy payments through their misguided “acts of decency and loyalty” to assist
The AAT has described its decision confirming a lack of government assistance under fair entitlements guarantee (FEG) for “two dedicated, loyal, hardworking, long-term employees of a company which was placed into liquidation” as “both unfair and unjust” but one which had to be made because that was the legal outcome. The company’s business was sold […]
Service of insolvency documents by email
With law well into the process of change to accommodate electronic communications and dealings, following COVID-19 in particular, we should expect some legislative consistency and co-ordination. It turns out we shouldn’t. In insolvency law, communications with creditors are necessary but the costs of doing so can be prohibitive. Under the old ways, back in 2001, […]
Is bankruptcy a life and death issue?
I was startled to be reminded of a regular question in the well-known US General Social Survey whether contemplating or going bankrupt was something that might prompt a person to take their own life. I would like to think not, indeed bankruptcy has a positive protective and cleansing effect such as to try to avoid […]
Costs against ASIC in its [“illegal phoenix activity”] claim against a liquidator
ASIC has been unsuccessful in resisting a costs order against it in its “illegal phoenix activity” proceedings against a liquidator following Justice Greenwood’s earlier judgment pointing out “there is no such thing, per se, as ‘illegal phoenix activity’”. In fact, throughout the law, the word ‘phoenix’ appears only in some wildlife protection laws, and laws […]
Peak indebtedness and other insolvency law views from New Zealand
The decision of the Full Federal Court in Badenoch Integrated Logging v Bryant[1] agreeing with New Zealand’s view about the “peak indebtedness rule” that favoured liquidators’ preference recovery actions is currently being debated by insolvency lawyers and practitioners. As I have commented before, New Zealand case law often provides a useful external oversight of Australian […]
Deregistered companies – UK reforms and some Australian comparisons
The UK Insolvency Service is to be given powers to investigate directors of companies that have been dissolved, or in our terms, deregistered, in order to prevent misuse of the process, it is said, “as a method of fraudulently avoiding repayment of Government backed loans given to businesses to support them during the Coronavirus pandemic”.[1] […]
Australia’s limited insolvency reforms for small business
With our international trading partners recently meeting to examine ways to handle micro to small enterprise (MSE) insolvency impacted by COVID-19,[1] the Australian government – through the Treasurer and the Assistant Treasurer, Minister for Housing, and Minister for Homelessness, Social and Community Housing – has announced some partial reforms to “improve Australia’s insolvency framework for […]
Bankruptcy trustee independence
The Australian personal insolvency regulator and government trustee, AFSA, has produced a useful report – Practitioner Independence in the Personal Insolvency System Best Practice Report 2021. This article elaborates further on some independence issues and examples from the insolvency case law; looks at the position of AFSA and the Official Trustee; and notes some potential re-thinking […]
An insolvency safe harbour based on culture and tradition?
For years Australia had no ‘safe harbour’ protection for directors from insolvent trading. In 2017, one was introduced, then three more, but a fifth has not been recommended. Australia’s lack of a ‘safe harbour’ protection from insolvent trading for directors changed in 2017 with the introduction of s 588GA of the Corporations Act, which protects […]
Australian lawyers attending UNCITRAL’s Working Group V on MSME insolvency – May 2021
UNCITRAL’s Working Group V – Insolvency is reconvening this week 4-7 May 2021, following its last meeting in December 2020. Australian lawyers are attending, remotely, on behalf of UNCCA. While Australia does not usually attend WGV, Australian representatives from UNCCA on behalf of Lawasia are attending, remotely – Assistant Professor Casey Watters of Bond University […]
World Bank insolvency principles – how does Australia compare?
The World Bank has released its updated Principles for Effective Insolvency and Creditor/Debtor Regimes (the Principles), emphasising the needs of micro, small and medium enterprises (MSMEs) in the context of COVID-19. These are said to be a “distillation of international best practice on design aspects of [insolvency] systems”, based on accepted core features of insolvency […]
Penalties and bankruptcy
A person in breach of consumer protection laws concerning the hire of 4 wheel drive vehicles has been ordered to pay a large penalty despite the fact she is bankrupt. Some doubts about the law on this, based on the Australian High Court decision in Foots, and the later UK Supreme Court decision in Nortel, […]
The UK’s Technical Guidance for Official Receivers – a published resource for Australian practitioners and regulators
The Insolvency Service in the UK has issued an updated version of its Technical guidance for Official Receivers[1] in administering corporate and personal insolvencies. Australia has no real equivalent, certainly in corporate insolvency, and useful practice and legal insights and comparisons can be made. The UK Official Receiver’s primary function is to administer and investigate […]
Litigation representatives and bankruptcy
A daughter’s evidence that her mother’s litigation and bankruptcy proceedings had become her mother’s “entire life” with her house “full of stacks of paper” and and that the mother had expressed suspicions that her trustee was bugging her phone was not enough to allow a litigation representative to be appointed to the mother’s legal proceedings. […]
NSW registered clubs (law) in trouble, again
What are described as the “arbitrary powers of the NSW Independent Liquor & Gaming Authority (ILGA)” are the subject of a recent critical comments by Insolvency News Online (INO).[1] Those powers have also been the subject of comment here,[2] not as to their claimed arbitrary nature, but as to why they exist at all. They […]
Virgin Airlines – special leave to appeal granted by the Australian High Court on a matter of the interpretation of the Cape Town Convention
Further to my report of 4 April 2021 below, the High Court of Australia has granted special leave to appeal on a question of the interpretation of the Cape Town Convention as it applies to the voluntary administration of Virgin Airlines in Australia. Leave to a party to appeal to the High Court is granted […]