“National interest insolvencies” – creditors vs the public interest?
At a seminar in London on 11 May 2022 – National Interest Insolvencies – Should these be for the State to manage? – [ Webinars – Reorg ] a decision of the English High Court was discussed where the government Official Receiver was appointed to a failed and hazardous electricity supply company the liquidation of […]
The UK new international economic crime laws – and Australia compared
The UK government has just enacted the Economic Crime (Transparency and Enforcement) Act 2022 which requires overseas entities holding UK real estate to disclose their beneficial owners. It also provides that no overseas entity can be registered at the UK Land Registries as the proprietor of a legal interest in UK land unless it has […]
International insolvency – impact of the Model Law, and more – UNCCA seminar on 27 May 2022
In a recent article on Australian insolvency law reform,[1] Justice Sarah Derrington, as chair of the Australian Law Reform Commission, usefully referred also to cross-border insolvency reform, noting the adoption of the UNCITRAL Model Law on Cross-border Insolvency in 2008, and likening its objectives to those of the 1988 Harmer Report.[2] International perspectives – UNCITRAL, […]
Insolvency disclaimer or state control – furnaces and coke ovens, pyrophoric iron sulphide and methane, effluent lagoons and asbestos …
The High Court of Australia has dismissed the liquidators’ application for special leave to appeal in Australian Sawmilling because the legislation from which it arose has in the meantime been repealed and replaced, hence the application did “not raise an issue of sufficient public importance to warrant the grant of special leave to appeal”.[1] In […]
FEG claim against receivers over circulating assets
The Fair Entitlements Guarantee [FEG] scheme through the Commonwealth has obtained orders delaying the deregistration of a company to allow a claim to be made against receivers for alleged breach of s 433 of the Corporations Act in relation to their treatment of the company’s assets. That section requires a receiver to give priority to […]
UK insolvency review – “better outcomes from insolvency and increased returns to creditors”?
The first and rather glowing report on the operation of the Insolvency (England and Wales) Rules 2016 has been issued by the UK government, showing “better outcomes from insolvency and increased returns to creditors”, such that the “UK’s insolvency regime remains among the best in the world”. But there nothing much to substantiate these comments. […]
Judicial Impartiality Final Report – still under wraps
The Australian Law Reform Commission handed its Judicial Impartiality Final Report to the Attorney-General, Senator Michaelia Cash on 6 December 2021. The report is yet to be released. The ALRC said it “look[s] forward to participating in public discussions on the recommendations in due course”, and no doubt do many others. This Final Report was […]
Bankruptcy law – no need for prior consent to service by email
Bankruptcy law has been changed to allow service by email without asking the person in advance whether they consent to being served by email. This is a concept I have referred to by reference to the Red Flag Act of 1865 when early cars required a man with a red flag to walk ‘60 yards’ […]
Australia’s safe harbour protection from insolvent trading liability, continued
The report on Australia’s safe harbour protection for directors (s 588GA) from what is said to be our strict insolvent trading laws (s 588G) will no doubt please those in the industry for its rigorous legal analysis and precise recommendations, and the preservation of the safe harbour law upon which many a practitioner’s business model […]
Why do we have preference recoveries in insolvency? – updated
The High Court of Australia (Keane and Gleeson JJ) has granted the liquidators special leave to appeal from the Full Federal Court decision abolishing the peak indebtedness rule. “KEANE J: Mr Evans [for the liquidators], I think so far as the importance of the question is concerned, you are probably pushing against an open door […]
Insolvency returns to creditors and other fictions – reissued March 2022
Insolvencies average dividend returns to unsecured creditors of under 5 cents in the dollar, in some cases, under 1 cent. For your unpaid debt of $10,000, you may receive $100, some months or years later. Much of insolvency is based on fiction. I’d like to think that those in my field are familiar with […]
ASIC’s power to wind up abandoned companies – a drop in the ocean?
ASIC has revised its guidance on the exercise of its powers to order the winding up of an abandoned company, noting that “directors sometimes abandon their companies without paying employee entitlements”: RG 242 ASIC’s power to wind up abandoned companies | ASIC – Australian Securities and Investments Commission ASIC wound up 19 such companies in […]
Government’s law reform of schemes of arrangement a “complete waste of resources when the core problem brewing is in the SME market”
Some may agree or not with the “blunt” submission of an Australian liquidator and trustee on the government’s review of schemes of arrangement law as being a “complete waste of resources when the core problem brewing is in the SME market”. The government’s 2021 discussion paper on schemes shows it is working through the next […]
Diversity and inclusion in insolvency
Diversity in the qualifications, experience, knowledge and abilities of those in the insolvency industry is the subject of this article, leaving other aspects of diversity in that sector to those more qualified. With ARITA anticipating International Women’s Day in promoting its own Diversity and Inclusion program,[1] I was prompted to see my own comments on […]
A recusal application dismissed; ALRC report on Judicial Impartiality awaited
Justice Steven Rares of the Federal Court of Australia has rejected an application to recuse himself from hearing a matter based upon claimed grounds that he had so conducted himself in a hearing involving the applicant and others in 2014 that a fair-minded lay observer reasonably might apprehend that he might not bring an impartial […]
Small business insolvency advice via the Ombudsman
The federal government’s current focus on personal insolvency law reform coincides with Small Business Month in NSW and the Small Business and Family Enterprise Ombudsman’s pending and timely report on business resilience in the face of natural disasters. See ASBFEO Newsletter March – OMBUDSMAN’S INQUIRY NAVIGATES ROAD TO RESILIENCE (mailchi.mp) In the context of natural […]
“Voluntarily becoming bankrupt” – the new bankruptcy process
A person goes voluntarily bankrupt in Australia by completing an online “Bankruptcy Form” with the Official Receiver. What is now more a loosely worded opaque techno process has been criticised by a Judge as containing a “presumptuous statement, “I am voluntarily becoming bankrupt” and a presumptuous question, “What do you believe is / are the […]
Liquidators’ examinations – a sea apart; legislative drafting – “a huge amount of material to wade through before they take a single step”
The decision of the High Court of Australia in Walton v Arrium [by majority (3-2)] adopting a broad interpretation of the examination power under s 596A of the Corporations Act is consistent with views of the 2015 New Zealand Court of Appeal in Finnigan v Ellis[1] that Australian courts have readily allowed examinations to proceed […]
Company owners and sole traders
In the government’s proposed 5 year review of the Insolvency Law Reform Act 2016 changes, one particular issue needing attention is indirectly prompted by the government’s recently proposed bankruptcy reforms. That issue concerns non-compliant directors of insolvent corporate businesses, and the obvious disparity in their treatment with that imposed on non-compliant bankrupts. That disparity is […]
Australia’s response to money laundering and terrorist financing – a Bill for a Bill
The Australian parliament’s response to a 2016 recommendation to introduce law to counter money laundering and terrorist financing – by way of a Bill introduced into parliament in February 2022 requiring the government to introduce a Bill into parliament by 30 September 2022 – has received a major set-back. The Senate Selection of Bills Committee […]
Australia’s latest MSE and personal insolvency law reform – this is supposed to be a “long-term approach”?
The Australian government seems to be putting the final touches to reforms of its insolvency law regime that commenced with the onset of COVID-19. These have included restrictions on the rights of creditors to pursue insolvency action during the pandemic (2020) and a streamlined small company business restructuring and liquidation regime (2021). These latest reforms […]
Proof of service of a bankruptcy notice – why it is, or why is it, so important?
A woman made bankrupt by a federal court registrar exercising judicial authority of the court has had her bankruptcy set aside because she was not properly served with the bankruptcy notice. The creditor was her former husband and the sequestration order was made on 25 November 2021. The facts The lawyers for the creditor had […]
Proof of service of a bankruptcy notice – why it is, or why is it, so important?
A woman made bankrupt by a federal court registrar exercising judicial authority of the court has had her bankruptcy set aside because she was not properly served with the bankruptcy notice. The creditor was her former husband and the sequestration order was made on 25 November 2021. The facts The lawyers for the creditor had […]
Deregistered/dissolved companies – let them be?
The UK Insolvency Service has been granted new investigative and disqualification powers to regulate directors who ‘dissolve’ (in Australian terms, ‘deregister’) their companies to avoid paying their liabilities. This is under the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021. If misconduct is found, directors can face serious sanctions, including court orders for compensation.[1] […]
