Restructuring & Insolvency

Restructuring & Insolvency

Restructuring & Insolvency

The end of the mining boom and subdued economic growth in Australia has seen an upturn in contentious work in the insolvency and restructuring area. In addition to litigation aimed at maximising returns for secured creditors, there has been an increase in the number of corporate investigations for troubled entities. White collar crime matters are also becoming a common feature of matters in the insolvency space.

Our cross-practice insolvency and restructuring team has earned a strong reputation for providing comprehensive and commercial advice when solving problems that arise when dealing with, or operating, financially troubled companies. Early and decisive intervention and strategic thinking is critical when dealing with potential insolvency matters and maximising results for our clients, which include creditors, debtors, insolvency practitioners, shareholders and company directors.

We are expert in utilising the full range of restructuring options in order to deliver positive outcomes where possible. We are equally capable in circumstances involving creditor enforcement action and associated commercial litigation.

Our highly awarded practitioners combine first class international and Australian experience with the ability to work seamlessly across all aspects of a transaction. This thorough approach to dealing with distressed businesses allows us to fully address the wide range of issues that develop when restructuring troubled companies and protecting our clients’ interests.

Our Experts

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Andrew Korbel

Partner Location Sydney Profile
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Felicity Daley

Special Counsel Location Sydney Profile
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James Davidson

Special Counsel Location Brisbane Profile
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Jason Salman

Partner Location Sydney Perth Profile
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John Stragalinos

Partner Location Melbourne Profile
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Kirsty Sutherland

Partner Location Perth Profile
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Mark Wilks

Partner Location Sydney Profile
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Matthew Critchley

Partner Location Melbourne Profile
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Michelle Dean

Special Counsel Location Perth Profile
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Sam Delaney

Partner Location Sydney Profile

Our Experience

420A claims

Corrs has acted for several insolvency practitioners in their successful defences of claims made by borrowers and guarantors for breach of duty in the conduct of post GFC receiverships.

Corrs succeeded in ensuring that all claims were ultimately dismissed by the Court or entirely withdrawn. Many lawyers profess the skill to advise insolvency practitioners on their duties. Very few have Corrs’ experience in defending actual claims and doing so successfully.

More

AlIco Finance Group refinancing and receivership

When Allco Finance Group collapsed under the weight of more than $1 billion of debt, its financiers and receivers faced the challenge of restructuring, refinancing and enforcing against a group comprising more than 850 companies. It was also critical to keep the company’s assets available for sale.

Corrs worked with Ferrier Hodgson to achieve this and secure the sale of Allco’s US$3 billion aviation business, the largest and most complex asset within the Allco Group.

The collapse of Allco Finance Group presented an extremely complex task for its financiers and receivers, with restructuring, refinancing and enforcing against a group comprising more than 850 companies, as well as numerous on and off balance sheet tax structures in jurisdictions across the globe.

Corrs worked closely with Allco’s financiers and the Ferrier Hodgson team to retain and manage the existing business and achieve the final sale. Court proceedings were instigated to maintain the assets available for sale by the receivers, and to restructure certain Allco group companies through a complicated deed of company arrangement and associated creditors trust.

The Allco receivership, of which this successful asset sale was just one component, was one of the three largest receiverships in Australia in 2009. The receivership continues today, with several pieces of high value and complex pieces of commercial litigation in which Corrs continues to act.

In 2014, Corrs represented the Allco receivers in their hard fought and successful court proceedings against the Australian Wholesale Property Fund. Corrs succeed in achieving the rescission of various transactions entered into prior to Allco’s collapse. The practical effect of the litigation was to unlock many tens of millions of dollars of additional recovery for Allco’s secured creditors from an otherwise worthless asset. Corrs also represents the Allco receivers in their court proceedings against Dr Gordon Fell in relation to Allco’s acquisition of Rubicon. Those proceedings will be heard by the NSW Supreme Court in 2015. 

More

Babcock & Brown litigation

Corrs acted for Luxembourg based BGP Investments in its €20 million NSW Supreme Court claim against Babcock & Brown International regarding a series of significant intercompany transactions involving entities in Australia, Malta and Luxembourg.

Centro Properties restructuring

When Centro Properties collapsed, the restructuring had to be innovative to cover more than 600 shopping centres in the US and Australia and stakeholders with significantly divergent interests. The solution, a conversion of more than $1 billion in debt into a ‘hybrid instrument’, set a precedent as an alternative to allowing a company to fall into insolvency.

Corrs’ pivotal role for the US lenders involved bringing together stakeholders to facilitate new money facilities and the splitting of security pools, including three sets of lenders in the US and Australia.

A key task was to re-work documentation to reflect asset realisation and then a stabilisation strategy. The transaction was complicated by the cross-border enforcement and documenting of inter-creditor arrangements under US and Australian law, and by the negotiation of a restructure against the uncertainty of the formal insolvency of trust structures.

Corrs’ role continues today in advising some of the US lenders as the restructure unfolds.

More

Perpetual Trustees Limited - Australian Capital Reserve class action

Corrs is advising The Trust Company, a wholly-owned subsidiary of Perpetual Limited, an Australian investment and trustee group, in defence of a class action brought by over 3000 investors in Australian Capital Reserve as a result of the losses suffered when that company was placed into voluntary administration.

PPB Advisory - Administration of Bandanna Energy

Corrs is acting for the administrators of the Bandanna Energy Ltd group of companies, which comprises 19 companies. Bandanna was seeking to build a coal mine through which it would supply coal to the Wiggins Island Coal Export Terminal in Gladstone, Queensland, under a take-or-pay agreement.

Bandanna was not able secure additional funding to continue with the development of the mine and subsequently appointed administrators. Corrs is assisting the administrators deal with numerous complex contracts governing the proposed development.

More

Pre-GFC negligent valuation claims

Corrs has acted for Suncorp Bank and other lenders in multiple NSW Supreme Court and Queensland Supreme Court claims against property valuers. The cases concern valuations prepared by independent property valuers which grossly overstated the true value of development sites over which the lender took security.

The lender relied on the valuations in deciding to make loans of up to $30 million and suffered significant damage when those loans turned sour and the properties were sold at a vast discount to their supposed value.

More

Primebroker litigation

Corrs acted for ABN Amro Clearing in Victorian Supreme Court and Court of Appeal proceedings brought by the receivers of Primebroker Securities Limited following that company’s collapse during the GFC.

The proceedings involved complex questions regarding the construction and operation of a securities lending agreement in an insolvent situation.

More

Receivership of Midwest Vanadium Pty Ltd

Corrs is acting for the receivers and managers of Midwest Vanadium Pty Ltd, and its immediate parent, Atlantic Vanadium Holdings Pty Ltd. Midwest is a vanadium producer which has over AU$500 million of outstanding debt (including US$335 million of 11.5 per cent Senior Secured Notes due 2018).

As a result of a fire at the plant in February 2014, Midwest was reliant on insurance proceeds in order to rebuild the plant and re-commence production. Notwithstanding the insurance policy, a proposed restructuring with the companies noteholders and other secured lenders did not eventuate, leaving the company little alternative but to enter administration (and subsequently, receivership).

More

Our Thinking

Is it the vibe? Constitutional challenges to the Court’s power to issue examination summonses.

This week’s TGIF considers Clive Palmer’s recent challenges to the constitutionality of the Court’s power under the Corporations Act to issue examination summonses.

More

Hopelessly insolvent – DOCA terminated in favour of public interest

This week’s TGIF considers the decision of Ziziphus Pty Ltd v Pluton Resources Limited (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement) where the Court favoured the public interest in terminating a DOCA

More

Consequences of ‘vague encouragement’ in commercial negotiations

A recent High Court decision has considered the issue of estoppel based on representations made during commercial negotiations.

More

When is a judgment debt not a judgment debt?

This week’s TGIF considers the case of Compton v Ramsay Health Care Australia Pty Ltd [2016] FCAFC 106, where the Court exercised its power to “go behind” a judgment upon which a petitioning creditor relied as proof of a debt that was owed.

More

S440J(1) will not always protect director/guarantors where borrower is in administration

This week’s TGIF considers Mizuho Bank Ltd v Ackroyd where the Court considered whether s 440J will prevent the continuation of proceedings to enforce a guarantee against a director of a company in administration

More

Principal loan contract varied, but guarantors fail in seeking to avoid liability to the bank under their guarantees

This week’s TGIF considers a recent case where two individuals challenged their liability under guarantees given by them in respect of monies borrowed by their family trust for property development purposes.

More

A “Prime” example of a mortgagee exercising its power of sale

This week’s TGIF considers CME Properties (Australia) Pty Ltd v Prime Capital Securities Pty Ltd [2016] WASC 231 which concerns a mortgagor’s application for an interim injunction to restrain a mortgagee from exercising its power of sale.

More

Setting aside DOCAs and exercising the casting vote

This week’s TGIF considers Britax Childcare Pty Ltd, in the matter of Infa Products Pty Ltd v Infa Products Pty Ltd (Administrators Appointed) [2016] FCA 848 which considers setting aside a DOCA and the administrator’s casting vote.

More

Banks beware – a prominent written notice for the purposes of the Code of Banking Practice may not be prominent notice in the circumstances!

This week’s TGIF considers the latest in a string of significant decisions on the Code of Banking Practice. The case sends a clear message to bankers: fail to comply with the Code at your peril!

More

Supreme Court of Victoria dismissed application to set aside statutory demand on basis of spurious and hypothetical dispute

This week’s TGIF considers Brandon Industries (Vic) Pty Ltd v Locker Pty Ltd where the Court dismissed an application to set aside a statutory demand due to the applicant’s failure to establish a genuine dispute or offsetting claim.

More

Australian Corporations Act not beholden to Chapter 11

This week’s TGIF considers Legend International Holdings Inc (In Liquidation) v Indian Farmers Fertiliser Cooperative Ltd & Kisan International Trading FZE [2016] VSCA 151 in which it was held that s 581 does not prohibit a winding up order where Ch

More

Breaches of the Code of Banking Practice result in a challenge to the enforcement of a guarantee

This week’s TGIF considers the most recent decision in a line of cases which hold that the provisions of the Code of Banking Practice may be incorporated into loan agreements, as well as guarantees given by individuals.

More

‘Not so onerous!’ – NSW Supreme Court declares purported disclaimer of contract null and void.

This week’s TGIF considers In the matter of Blue Sennar Air Pty Ltd (in liq); In the matter of Eye Plantain Pty Ltd (in liq) [2016] NSWSC 772.

More

A vexed case - Court reigns in vexatious litigant to protect Bank

This week’s TGIF considers the Federal Court decision of National Australia Bank Ltd v Garrett [2016] FCA 714 in which the Court stepped in to invalidate and restrain an improper registration on the PPSR

More

Guarantors must ‘pay now, sue later’

This week’s TGIF considers Palaniappan v Westpac Banking Corporation [2016] WASCA 72 in which the Court clarified the scope of ‘suspension clauses’ in guarantee agreements.

More

‘What a Legend’ – Court rejects recognition of foreign proceeding and orders wind up in the face of Chapter 11 bankruptcy

This week’s TGIF considers In the matter of Legend International Holdings Inc [2016] VSC 308 in which the Court declined to recognise a US Chapter 11 bankruptcy proceeding and made orders that the company be wound up.

More

Consequences of bringing a deed of company arrangement to a premature end

This week’s TGIF considers the decision of Deputy Commissioner of Taxation v BE100 Property Investments Pty Ltd [2016] FCA 597 where the court found that a deed administrator acted unreasonably by attempting to terminate a deed of company arrangement

More

Federal Court finds that a retention of title clause is to be considered a “security”, defeating the liquidators’ unfair preference claim

This week’s TGIF considers the decision in Hussain v CSR Building Products Limited, in the matter of FPJ Group Pty Ltd (In Liq), in which an ROT clause was held to be a “security”, defeating the liquidators’ unfair preference claim.

More

A sign for unfunded liquidators: what you need to know about assigning a cause of action

This week’s TGIF examines the NSW Supreme Court decision In the Matter of Kevin Jacobsen Pty Limited (in liq) [2016] NSWSC 538 which considered a challenge to an application under s 477(2B) to assign a cause of action.

More

Administrators use general power under s 447A to stay a commercial arbitration

This week’s TGIF considers the decision of In the matter of THO Services Limited [2016] NSWSC 509 in which the Court exercised its general power to extend the voluntary administration moratorium period to a commercial arbitration.

More

Commissioner of Taxation circumvents the abolition of taxation priority in liquidations

A recent NSW Court of Appeal decision has considered the validity of the Commissioner of Taxation’s treatment of debits and credits in an insolvency context.

More

The Supreme Court of NSW weighs in on market-based causation

The proponents of indirect or “market-based” causation in securities actions are vindicated by a decision of the Supreme Court of NSW in Re HIH Insurance Limited (In liquidation) [2016] NSWSC 482

More

Special purpose receivers – Court’s broad power to override trust deed

This week’s TGIF considers In the matter of Banksia Securities Limited (in liquidation) (receivers and managers appointed) [2016] NSWSC 357 in which the Court uses its broad remedial powers to appoint special purpose receivers.


More

Improper Motives - Court invalidates appointment of administrator

Victorian Supreme Court rules that the appointment of an administrator was invalid, void and of no effect because the directors did not genuinely believe the company was insolvent and appointed the administrator for an improper purpose.

More

Trusted to distribute – Court provides guidance for liquidator on character of sale proceeds

This week’s TGIF considers the recent decision of the Federal Court which concerned the proper distribution of sale proceeds and whether those proceeds comprised part of the “property of the company”.

More

Unreasonable director-related transactions – liquidators bear the onus of proof

This week’s TGIF considers the decision of Crowe-Maxwell v Frost [2016] NSWCA 46 in which the Court held that a liquidator did not discharge his onus of proving relevant transactions were unreasonable director-related transactions

More

WA Court of Appeal finds guarantor’s liability rescinded by subsequent credit contract

This week’s TGIF considers the decision in ANZ v Manasseh [2016] WASCA 41, where the court considered the enforceability of a guarantee when a subsequent credit contract is entered into without the guarantor’s consent.

More

Guaranteed certainty: Creditors not required to exhaust remedies against a debtor before seeking to enforce a guarantee

Victorian Supreme Court confirms that, unless there is an express provision for the benefit of a guarantor, a creditor will not be required to exhaust its remedies against a debtor before having recourse to the guarantee.

More

Encouraging Innovation through Insolvency Reform

The Turnbull Government’s Innovation Reforms provide for a more flexible approach to restructuring which will assist entrepreneurship and existing businesses battle digital disruption.

More

NSW Court finds that section 556 priorities do not apply to trust assets

This week’s TGIF considers whether section 556(1) priorities apply to claims against trust assets and in particular the superannuation guarantee charge.

More

Federal Circuit Court considers the prima facie right of a creditor to a sequestration order despite allegations of fraud, malice and incapacity

The Federal Circuit Court of Australia in McNally v Fazio (No. 3) [2016] FCCA 215 considers a petitioning creditor’s prima facie right to a sequestration order despite allegations of fraud, malice and incapacity.

More

After CGU Insurance Ltd v Blakeley & Ors, liquidators welcome insurers to the party

In CGU Insurance Ltd v Blakeley & Ors, the High Court confirms the ability of certain third party claimants to directly pursue the insurers of insolvent and potentially insolvent insured defendants.

More

Does a breach of clause 25.1 of the Code of Banking Practice render a guarantee void? It appears not

This week’s TGIF considers the decision of Commonwealth Bank of Australia v Currey in which the Court looks at whether a breach of clause 25.1 of the Code of Banking Practice renders a guarantee void or voidable.

More

Living on the hedge – Don’t let your hedging agreement cost you

Hedging agreements are an integral part of many loan transactions but often do not receive the attention they deserve. Here are four key points to bear in mind when drafting and negotiating a hedging agreement.

More

The Code of Banking Practice and guarantees: are you a diligent and prudent banker?

This week’s TGIF considers whether banks owe guarantors a duty to exercise the care and skill of a diligent and prudent banker in selecting and applying their credit assessment methods and forming an opinion about a customer’s ability to repay.

More

Taking cross border security in Asia: Seven steps to success

How to structure a security package that is compliant with different systems of law.

More

Renewable energy for remote Australia - Can our rural and indigenous communities go off-grid?

Debt-funded renewable energy is the practical solution for energy security in remote Australia.

More

Grand Theft Backhoe: PPSA, contractor insolvency and priority over construction equipment and materials

Four lessons to prevent a PPSA disaster happening to you.

More

Directors' duties - Insolvent trading: Five rules to deal with a company in financial difficulty

Directors of companies facing financial difficulty must avoid a ‘head in the sand’ mentality.

More

Curbing the flight of the phoenix - New solutions are needed to address insolvency in the construction industry

Building company insolvencies are rife and state governments must act.

More

NSW Government takes first step to address the insolvency crisis in the construction industry

The spate of insolvencies in the NSW construction sector shows no signs of easing. On 24 October 2013, the Building and Construction Industry Security of Payment Act Amendment Bill 2013 was introduced into Parliament.

More

“Lock-up” devices put to the test - The battle for Billabong continues

Despite Billabong’s extensive sales process, the Takeover’s Panel has not allowed it to lock itself up so as to deter rival proposals.

More

Foreign arbitral award enforceable against an Australian corporation in liquidation

On 19 April 2013, the Federal Court of Australia handed down judgment in Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd granting Eopply leave to enforce a foreign arbitral award made in China against an Australian corporation in liquidation.

More

HIH offers yet another lesson for investors - This time on the dangers of convertible notes

Holders of HIH (NZ) convertible notes have little hope of recovering any of their investment. But it didn’t have to end this way…

More

Ready for take-off: Creating a more creditor-friendly insolvency regime for Australian aviation finance

Australia has signed an international agreement that should lead to cheaper and easier financing of aircraft…but there’s a catch.

More

Head contractor insolvency - Protecting supply chain payments in construction projects using Project Bank Accounts

In government-sponsored construction projects, a new direct payment system could mitigate insolvency risk to employers and subcontractors if the head contractor’s business fails.

More

New South Wales stamp duty changes

An amending bill has been introduced into the New South Wales Parliament which will make significant changes to the corporate reconstruction exemption provisions and introduce a specific anti-avoidance measure into the landholder duty provisions.

More

Is it time for Australia to rethink its approach to financial restructurings?

As a result of the willingness of local lenders to sell debt in the secondary market there has been increased participation from off-shore lenders keen to utilise foreign restructuring techniques in Australia. How should local lenders respond?

More

Our Experience

420A claims

Corrs has acted for several insolvency practitioners in their successful defences of claims made by borrowers and guarantors for breach of duty in the conduct of post GFC receiverships.

Corrs succeeded in ensuring that all claims were ultimately dismissed by the Court or entirely withdrawn. Many lawyers profess the skill to advise insolvency practitioners on their duties. Very few have Corrs’ experience in defending actual claims and doing so successfully.

AlIco Finance Group refinancing and receivership

When Allco Finance Group collapsed under the weight of more than $1 billion of debt, its financiers and receivers faced the challenge of restructuring, refinancing and enforcing against a group comprising more than 850 companies. It was also critical to keep the company’s assets available for sale.

Corrs worked with Ferrier Hodgson to achieve this and secure the sale of Allco’s US$3 billion aviation business, the largest and most complex asset within the Allco Group.

The collapse of Allco Finance Group presented an extremely complex task for its financiers and receivers, with restructuring, refinancing and enforcing against a group comprising more than 850 companies, as well as numerous on and off balance sheet tax structures in jurisdictions across the globe.

Corrs worked closely with Allco’s financiers and the Ferrier Hodgson team to retain and manage the existing business and achieve the final sale. Court proceedings were instigated to maintain the assets available for sale by the receivers, and to restructure certain Allco group companies through a complicated deed of company arrangement and associated creditors trust.

The Allco receivership, of which this successful asset sale was just one component, was one of the three largest receiverships in Australia in 2009. The receivership continues today, with several pieces of high value and complex pieces of commercial litigation in which Corrs continues to act.

In 2014, Corrs represented the Allco receivers in their hard fought and successful court proceedings against the Australian Wholesale Property Fund. Corrs succeed in achieving the rescission of various transactions entered into prior to Allco’s collapse. The practical effect of the litigation was to unlock many tens of millions of dollars of additional recovery for Allco’s secured creditors from an otherwise worthless asset. Corrs also represents the Allco receivers in their court proceedings against Dr Gordon Fell in relation to Allco’s acquisition of Rubicon. Those proceedings will be heard by the NSW Supreme Court in 2015. 

Babcock & Brown litigation

Corrs acted for Luxembourg based BGP Investments in its €20 million NSW Supreme Court claim against Babcock & Brown International regarding a series of significant intercompany transactions involving entities in Australia, Malta and Luxembourg.

Centro Properties restructuring

When Centro Properties collapsed, the restructuring had to be innovative to cover more than 600 shopping centres in the US and Australia and stakeholders with significantly divergent interests. The solution, a conversion of more than $1 billion in debt into a ‘hybrid instrument’, set a precedent as an alternative to allowing a company to fall into insolvency.

Corrs’ pivotal role for the US lenders involved bringing together stakeholders to facilitate new money facilities and the splitting of security pools, including three sets of lenders in the US and Australia.

A key task was to re-work documentation to reflect asset realisation and then a stabilisation strategy. The transaction was complicated by the cross-border enforcement and documenting of inter-creditor arrangements under US and Australian law, and by the negotiation of a restructure against the uncertainty of the formal insolvency of trust structures.

Corrs’ role continues today in advising some of the US lenders as the restructure unfolds.

Perpetual Trustees Limited - Australian Capital Reserve class action

Corrs is advising The Trust Company, a wholly-owned subsidiary of Perpetual Limited, an Australian investment and trustee group, in defence of a class action brought by over 3000 investors in Australian Capital Reserve as a result of the losses suffered when that company was placed into voluntary administration.

PPB Advisory - Administration of Bandanna Energy

Corrs is acting for the administrators of the Bandanna Energy Ltd group of companies, which comprises 19 companies. Bandanna was seeking to build a coal mine through which it would supply coal to the Wiggins Island Coal Export Terminal in Gladstone, Queensland, under a take-or-pay agreement.

Bandanna was not able secure additional funding to continue with the development of the mine and subsequently appointed administrators. Corrs is assisting the administrators deal with numerous complex contracts governing the proposed development.

Pre-GFC negligent valuation claims

Corrs has acted for Suncorp Bank and other lenders in multiple NSW Supreme Court and Queensland Supreme Court claims against property valuers. The cases concern valuations prepared by independent property valuers which grossly overstated the true value of development sites over which the lender took security.

The lender relied on the valuations in deciding to make loans of up to $30 million and suffered significant damage when those loans turned sour and the properties were sold at a vast discount to their supposed value.

Primebroker litigation

Corrs acted for ABN Amro Clearing in Victorian Supreme Court and Court of Appeal proceedings brought by the receivers of Primebroker Securities Limited following that company’s collapse during the GFC.

The proceedings involved complex questions regarding the construction and operation of a securities lending agreement in an insolvent situation.

Receivership of Midwest Vanadium Pty Ltd

Corrs is acting for the receivers and managers of Midwest Vanadium Pty Ltd, and its immediate parent, Atlantic Vanadium Holdings Pty Ltd. Midwest is a vanadium producer which has over AU$500 million of outstanding debt (including US$335 million of 11.5 per cent Senior Secured Notes due 2018).

As a result of a fire at the plant in February 2014, Midwest was reliant on insurance proceeds in order to rebuild the plant and re-commence production. Notwithstanding the insurance policy, a proposed restructuring with the companies noteholders and other secured lenders did not eventuate, leaving the company little alternative but to enter administration (and subsequently, receivership).

Our Thinking

Is it the vibe? Constitutional challenges to the Court’s power to issue examination summonses.

This week’s TGIF considers Clive Palmer’s recent challenges to the constitutionality of the Court’s power under the Corporations Act to issue examination summonses.

Hopelessly insolvent – DOCA terminated in favour of public interest

This week’s TGIF considers the decision of Ziziphus Pty Ltd v Pluton Resources Limited (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement) where the Court favoured the public interest in terminating a DOCA

Consequences of ‘vague encouragement’ in commercial negotiations

A recent High Court decision has considered the issue of estoppel based on representations made during commercial negotiations.

When is a judgment debt not a judgment debt?

This week’s TGIF considers the case of Compton v Ramsay Health Care Australia Pty Ltd [2016] FCAFC 106, where the Court exercised its power to “go behind” a judgment upon which a petitioning creditor relied as proof of a debt that was owed.

S440J(1) will not always protect director/guarantors where borrower is in administration

This week’s TGIF considers Mizuho Bank Ltd v Ackroyd where the Court considered whether s 440J will prevent the continuation of proceedings to enforce a guarantee against a director of a company in administration

Principal loan contract varied, but guarantors fail in seeking to avoid liability to the bank under their guarantees

This week’s TGIF considers a recent case where two individuals challenged their liability under guarantees given by them in respect of monies borrowed by their family trust for property development purposes.

A “Prime” example of a mortgagee exercising its power of sale

This week’s TGIF considers CME Properties (Australia) Pty Ltd v Prime Capital Securities Pty Ltd [2016] WASC 231 which concerns a mortgagor’s application for an interim injunction to restrain a mortgagee from exercising its power of sale.

Setting aside DOCAs and exercising the casting vote

This week’s TGIF considers Britax Childcare Pty Ltd, in the matter of Infa Products Pty Ltd v Infa Products Pty Ltd (Administrators Appointed) [2016] FCA 848 which considers setting aside a DOCA and the administrator’s casting vote.

Banks beware – a prominent written notice for the purposes of the Code of Banking Practice may not be prominent notice in the circumstances!

This week’s TGIF considers the latest in a string of significant decisions on the Code of Banking Practice. The case sends a clear message to bankers: fail to comply with the Code at your peril!

Supreme Court of Victoria dismissed application to set aside statutory demand on basis of spurious and hypothetical dispute

This week’s TGIF considers Brandon Industries (Vic) Pty Ltd v Locker Pty Ltd where the Court dismissed an application to set aside a statutory demand due to the applicant’s failure to establish a genuine dispute or offsetting claim.

Australian Corporations Act not beholden to Chapter 11

This week’s TGIF considers Legend International Holdings Inc (In Liquidation) v Indian Farmers Fertiliser Cooperative Ltd & Kisan International Trading FZE [2016] VSCA 151 in which it was held that s 581 does not prohibit a winding up order where Ch

Breaches of the Code of Banking Practice result in a challenge to the enforcement of a guarantee

This week’s TGIF considers the most recent decision in a line of cases which hold that the provisions of the Code of Banking Practice may be incorporated into loan agreements, as well as guarantees given by individuals.

‘Not so onerous!’ – NSW Supreme Court declares purported disclaimer of contract null and void.

This week’s TGIF considers In the matter of Blue Sennar Air Pty Ltd (in liq); In the matter of Eye Plantain Pty Ltd (in liq) [2016] NSWSC 772.

A vexed case - Court reigns in vexatious litigant to protect Bank

This week’s TGIF considers the Federal Court decision of National Australia Bank Ltd v Garrett [2016] FCA 714 in which the Court stepped in to invalidate and restrain an improper registration on the PPSR

Guarantors must ‘pay now, sue later’

This week’s TGIF considers Palaniappan v Westpac Banking Corporation [2016] WASCA 72 in which the Court clarified the scope of ‘suspension clauses’ in guarantee agreements.

‘What a Legend’ – Court rejects recognition of foreign proceeding and orders wind up in the face of Chapter 11 bankruptcy

This week’s TGIF considers In the matter of Legend International Holdings Inc [2016] VSC 308 in which the Court declined to recognise a US Chapter 11 bankruptcy proceeding and made orders that the company be wound up.

Consequences of bringing a deed of company arrangement to a premature end

This week’s TGIF considers the decision of Deputy Commissioner of Taxation v BE100 Property Investments Pty Ltd [2016] FCA 597 where the court found that a deed administrator acted unreasonably by attempting to terminate a deed of company arrangement

Federal Court finds that a retention of title clause is to be considered a “security”, defeating the liquidators’ unfair preference claim

This week’s TGIF considers the decision in Hussain v CSR Building Products Limited, in the matter of FPJ Group Pty Ltd (In Liq), in which an ROT clause was held to be a “security”, defeating the liquidators’ unfair preference claim.

A sign for unfunded liquidators: what you need to know about assigning a cause of action

This week’s TGIF examines the NSW Supreme Court decision In the Matter of Kevin Jacobsen Pty Limited (in liq) [2016] NSWSC 538 which considered a challenge to an application under s 477(2B) to assign a cause of action.

Administrators use general power under s 447A to stay a commercial arbitration

This week’s TGIF considers the decision of In the matter of THO Services Limited [2016] NSWSC 509 in which the Court exercised its general power to extend the voluntary administration moratorium period to a commercial arbitration.

Commissioner of Taxation circumvents the abolition of taxation priority in liquidations

A recent NSW Court of Appeal decision has considered the validity of the Commissioner of Taxation’s treatment of debits and credits in an insolvency context.

The Supreme Court of NSW weighs in on market-based causation

The proponents of indirect or “market-based” causation in securities actions are vindicated by a decision of the Supreme Court of NSW in Re HIH Insurance Limited (In liquidation) [2016] NSWSC 482

Special purpose receivers – Court’s broad power to override trust deed

This week’s TGIF considers In the matter of Banksia Securities Limited (in liquidation) (receivers and managers appointed) [2016] NSWSC 357 in which the Court uses its broad remedial powers to appoint special purpose receivers.


Improper Motives - Court invalidates appointment of administrator

Victorian Supreme Court rules that the appointment of an administrator was invalid, void and of no effect because the directors did not genuinely believe the company was insolvent and appointed the administrator for an improper purpose.

Trusted to distribute – Court provides guidance for liquidator on character of sale proceeds

This week’s TGIF considers the recent decision of the Federal Court which concerned the proper distribution of sale proceeds and whether those proceeds comprised part of the “property of the company”.

Unreasonable director-related transactions – liquidators bear the onus of proof

This week’s TGIF considers the decision of Crowe-Maxwell v Frost [2016] NSWCA 46 in which the Court held that a liquidator did not discharge his onus of proving relevant transactions were unreasonable director-related transactions

WA Court of Appeal finds guarantor’s liability rescinded by subsequent credit contract

This week’s TGIF considers the decision in ANZ v Manasseh [2016] WASCA 41, where the court considered the enforceability of a guarantee when a subsequent credit contract is entered into without the guarantor’s consent.

Guaranteed certainty: Creditors not required to exhaust remedies against a debtor before seeking to enforce a guarantee

Victorian Supreme Court confirms that, unless there is an express provision for the benefit of a guarantor, a creditor will not be required to exhaust its remedies against a debtor before having recourse to the guarantee.

Encouraging Innovation through Insolvency Reform

The Turnbull Government’s Innovation Reforms provide for a more flexible approach to restructuring which will assist entrepreneurship and existing businesses battle digital disruption.

NSW Court finds that section 556 priorities do not apply to trust assets

This week’s TGIF considers whether section 556(1) priorities apply to claims against trust assets and in particular the superannuation guarantee charge.

Federal Circuit Court considers the prima facie right of a creditor to a sequestration order despite allegations of fraud, malice and incapacity

The Federal Circuit Court of Australia in McNally v Fazio (No. 3) [2016] FCCA 215 considers a petitioning creditor’s prima facie right to a sequestration order despite allegations of fraud, malice and incapacity.

After CGU Insurance Ltd v Blakeley & Ors, liquidators welcome insurers to the party

In CGU Insurance Ltd v Blakeley & Ors, the High Court confirms the ability of certain third party claimants to directly pursue the insurers of insolvent and potentially insolvent insured defendants.

Does a breach of clause 25.1 of the Code of Banking Practice render a guarantee void? It appears not

This week’s TGIF considers the decision of Commonwealth Bank of Australia v Currey in which the Court looks at whether a breach of clause 25.1 of the Code of Banking Practice renders a guarantee void or voidable.

Living on the hedge – Don’t let your hedging agreement cost you

Hedging agreements are an integral part of many loan transactions but often do not receive the attention they deserve. Here are four key points to bear in mind when drafting and negotiating a hedging agreement.

The Code of Banking Practice and guarantees: are you a diligent and prudent banker?

This week’s TGIF considers whether banks owe guarantors a duty to exercise the care and skill of a diligent and prudent banker in selecting and applying their credit assessment methods and forming an opinion about a customer’s ability to repay.

Taking cross border security in Asia: Seven steps to success

How to structure a security package that is compliant with different systems of law.

Renewable energy for remote Australia - Can our rural and indigenous communities go off-grid?

Debt-funded renewable energy is the practical solution for energy security in remote Australia.

Grand Theft Backhoe: PPSA, contractor insolvency and priority over construction equipment and materials

Four lessons to prevent a PPSA disaster happening to you.

Directors' duties - Insolvent trading: Five rules to deal with a company in financial difficulty

Directors of companies facing financial difficulty must avoid a ‘head in the sand’ mentality.

Curbing the flight of the phoenix - New solutions are needed to address insolvency in the construction industry

Building company insolvencies are rife and state governments must act.

NSW Government takes first step to address the insolvency crisis in the construction industry

The spate of insolvencies in the NSW construction sector shows no signs of easing. On 24 October 2013, the Building and Construction Industry Security of Payment Act Amendment Bill 2013 was introduced into Parliament.

“Lock-up” devices put to the test - The battle for Billabong continues

Despite Billabong’s extensive sales process, the Takeover’s Panel has not allowed it to lock itself up so as to deter rival proposals.

Foreign arbitral award enforceable against an Australian corporation in liquidation

On 19 April 2013, the Federal Court of Australia handed down judgment in Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd granting Eopply leave to enforce a foreign arbitral award made in China against an Australian corporation in liquidation.

HIH offers yet another lesson for investors - This time on the dangers of convertible notes

Holders of HIH (NZ) convertible notes have little hope of recovering any of their investment. But it didn’t have to end this way…

Ready for take-off: Creating a more creditor-friendly insolvency regime for Australian aviation finance

Australia has signed an international agreement that should lead to cheaper and easier financing of aircraft…but there’s a catch.

Head contractor insolvency - Protecting supply chain payments in construction projects using Project Bank Accounts

In government-sponsored construction projects, a new direct payment system could mitigate insolvency risk to employers and subcontractors if the head contractor’s business fails.

New South Wales stamp duty changes

An amending bill has been introduced into the New South Wales Parliament which will make significant changes to the corporate reconstruction exemption provisions and introduce a specific anti-avoidance measure into the landholder duty provisions.

Is it time for Australia to rethink its approach to financial restructurings?

As a result of the willingness of local lenders to sell debt in the secondary market there has been increased participation from off-shore lenders keen to utilise foreign restructuring techniques in Australia. How should local lenders respond?

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Andrew Korbel

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Jason Salman

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Mark Wilks

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Sam Delaney

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