Annual Review of Insolvency & Restructuring Law - Allens

210 Pages·2002·0.51 MB·English

Annual Review of Insolvency &
2001
Restructuring Law
For further information about Insolvency & Restructuring Law, please contact:
SYDNEY BRISBANE
Andrew Boxall Alfio Pappalardo
Ph: [phone] Ph: [phone]
email: [email protected] email: [email protected]
Jim Dunstan Ian Pyman
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email: [email protected] email: [email protected]
Tim L’Estrange Geoff Rankin
Ph: [phone] Ph: [phone]
email: Tim L’[email protected] email: [email protected]
Paul Nicols Sandy Wilson
Ph: [phone] Ph: [phone]
email: [email protected] email: [email protected]
Michael Quinlan
Ph: [phone] MELBOURNE
email: [email protected]
Tania Cini
BANGKOK
Ph: [phone]
Lampros Vassiliou email: [email protected]
Ph: 662 679 1333
Clint Hinchen
email: [email protected]
Ph: [phone]
PERTH email: [email protected]
Steven Cole Simon Lynch
Ph: [phone] (03) 9613 8922
email: [email protected] email: [email protected]
Ian Pyman
David Martino
Ph: [phone] (03) 9613 8955
email: [email protected] email: [email protected]
Visit our website, www.aar.com.au/services/insolv/, for:
• An electronic, fully-searchable version of this Review at http://www.aar.com.au/
publications/arir/
(cid:127) Electronic versions of past editions of this Review
(cid:127) Papers delivered at our monthly Forums
(cid:127) New cases and legislative developments
We would very much like your feedback on this Review: there’s a short questionnaire on our website.
If you would like further information about our monthly Forums on Insolvency & Restructuring Law
please contact Nicole Higginbotham on [phone]
ANNUAL REVIEW OF INSOLVENCY & RESTRUCTURING LAW 2001
Also available online at:
http://www.aar.com.au/publications/ari/
C Allens Arthur Robinson 2002
Written and published by Allens Arthur Robinson
The Chifley Tower, 2 Chifley Square, Sydney NSW 2000
www.aar.com.au
Printed by Rowprint
1-5 Errol Street, North Melbourne Vic 3051
The summaries in this review do not seek to express a view on the correctness or otherwise of any court
judgment. This publication should not be treated as providing any definitive advice on the law.
It is recommended that readers seek specific advice in relation to any legal matter they are handling.
PREFACE
2001 was an extraordinary year for insolvency practitioners. In the space of 12 months we have seen the collapse of a major
airline (Ansett), a major insurer (HIH), a major telecommunications carrier (One-Tel) and a major mining company (Pasminco), not
to mention a host of other high-profile insolvencies. On a more personal level, it has also been an exciting time for us with the
creation of Allens Arthur Robinson on 1 July 2001. With the success of the Review in previous years, it gives me great pleasure to
provide the first Allens Arthur Robinson Review of Insolvency and Restructuring Law to many more of our clients, especially in
Victoria and Western Australia.
Allens Arthur Robinson has a significant insolvency and restructuring practice which can now more effectively service the needs
of our clients nationally and regionally in Asia. We see the publication of our third Annual Review as one way of showing our
appreciation to our clients for their continuing support.
Our aim is to include decisions and policy developments in Australia and in other common law countries delivered or reported in
2001, which are of interest and practical use to insolvency and restructuring practitioners and to financial institutions, or which
represent a significant development in the law. In general, we concentrate on reporting on decisions and their practical impact.
This year the Annual Review has been expanded to incorporate sections on schemes of arrangement and procedure for the first
time.
Also for the first time, this Review is being published simultaneously in print and on our website, the advantage of the electronic
version being that it is fully searchable. To see this publication on our website, as well as printable versions of previous editions,
go to http://www.aar.com.au/publications/arir/.
Furthermore we are constantly adding to our website, providing publications, up-to-date details on forums and seminars and
information about our services, among other things. Point your web browser at: http://www.aar.com.au/services/insolv/
publications.htm.
I thank all those partners, senior associates, lawyers, research assistants and summer clerks at Allens Arthur Robinson who have
contributed to this publication, particularly John Warde and Sally Baker who edited the Review.
I hope that you find this publication both useful and interesting as a reference tool. We welcome your feedback and comment –
there’s a form on the website – and look forward to another year of producing the highest level of service to you.
Geoff Rankin
Practice Group Leader – Corporate Insolvency and Restructuring
CONTRIBUTORS
Sarah Armstrong Lachlan Menzies
James Arnott Edward Moon
Sally Baker Andrew Murray
Clare Bellis Penny Neskovcin
Andrew Boxall David Noakes
Jenny Campbell Michael Quinlan
Shyama Chatterjee Monika Lancucki
Simon Davis Alex Palmer
Ben Dunstan Alf Pappalardo
Adrian Estwick Alana Petty
Emma Flood Scott Robinson
Kristine Gibson Philippa Ryan
Patrick Hay Christopher Scott
Helen Horsington Natalie Shaw
Rohini Jannu Malcolm Stephens
Simon Keizer Tom Story
Richard Khoe Joe Tan
Bashi Kumar Lampros Vassiliou
Avryl Lattin John Warde
Mark Lindfield Lila Wehbe
Jeremy Low Caitlin Westgarth
Thomas McAuliffe Andrew Wong
Simon McConnell Simon Writer
Matthew McLennan Daniel Yeo
CONTENTS
Deeds of Company Arrangement and Voluntary 15
Administration
Extension of time to ensure sale of business as going concern 15
Re Diamond Press Australia Pty Ltd
When is an examination order an abuse of process? 16
Wood v Heard
No variation of DOCA without administrator’s say so 18
Surber v Lean
Reserve administrator is liable for lead administrator’s defaults 20
Heesh v Companies Auditors and Liquidators Disciplinary Board
Planes, trains and automobiles – recovering leased property 22
Intrepid Aviation Partners VII LLC v Ansett Australia Ltd (administrators appointed)
Personal liability of deed administrators for costs 24
Cresvale Far East v Cresvale Securities (No. 2)
Getting access to the company’s property 26
Jameson v Guri Wa Ngundagar Aboriginal Corporation and Charles Quinland & Ors
Representation of creditors without proxies 28
Rappas v Ansett Australia Ltd (administrators appointed)
Rival proofs between creditor and surety 30
Lumley General Insurance Ltd v Oceanfast Marine Pty Ltd
Examinations: administrators may strike while the iron is hot 32
MacPherson v Sherman (as deed administrator)
Order granted restraining secured creditor from selling property 33
Fekala Pty Ltd v Cenbond Pty Ltd
Extension of time to execute a DOCA 35
Re Sydney Ringtread Tyres Pty Ltd (administrator appointed)
Going into VA: Can future liabilities be taken into account? 36
Crimmins v Glenview Home Units Pty Limited
Extending time for second creditors' meeting: Australasian Memory revisited 37
Re Old Papa’s Holdings Ltd; Ex parte Wallman
Ansett: Court approves compromise of claim where value of claim 39
was not fully investigated
Re Ansett Australia Limited (administrators appointed) and Mentha
(as administrator); Re Hazelton Air Charter Pty Ltd and Humphris (as administrator)
When will a Court set aside or vary a DOCA? 41
Re The Corporations Law s444E and s459P; Feisst v Salon Pty Ltd (under administration)
Administrator’s use of general proxies to vote against motion to remove him/her 43
Re Builders Associated Pty Ltd (administrator appointed); Lord (applicant)
Validity of administrator's appointment 44
Glen Morton Holdings Pty Ltd (administrator appointed) v D’Aloia (as administrator)
Fixing an invalid appointment: How elastic is s447A? 45
Shirlaw v Graham
Directors and Corporate Governance 47
Failure to keep satisfactory accounting records 47
Love v Australian Securities Commission
Insolvent trading: are taxes debts and what constitutes insolvency anyway? 49
Powell v Fryer
Directors must consider benefit to company 51
Maronis Holdings Ltd v Nippon Credit Australia Ltd
The test for shadow/de facto directors 53
Natcomp Technology Australia Pty Limited v Graiche
Insolvent trading: overseas directors can be liable 55
James v Andrews
Directors’ liability for unremitted group tax 56
Deputy Commissioner of Taxation v Pejkovic
No excuse for unpaid group tax 58
Deputy Commissioner of Taxation of the Commonwealth of Australia v
Raymond George Findlay, Maxwell Findlay & Peter Michael Findlay
Insolvent trading: when is a debt “incurred”? 60
Harrison (as liquidator) v Lewis
Insolvent trading: Spared from personal liability by meaty excuses 62
Perkins v Viney
Lending & Securities 64
Disposition of company property by its bank 64
Hollicourt (Contracts) Limited (in liquidation) v Bank of Ireland
Is a credit agreement a charge? 65
Radio Frequency Systems Pty Limited v Guthrie (as liquidator) of ULT Limited
(receiver appointed) (in liquidation)
Another chapter in the fixed or floating saga 66
Agnew v Commissioner of Inland Revenue
Unconscionable conduct and security holders 68
Cole & Anor v Challenge Bank Limited & Anor
Liquidation 70
Dissolution of corporate partnerships 70
Anderson Group Pty Ltd (in liquidation) v Davies
First bite of the cherry: rewarding creditors who fund recovery actions 71
State Bank of NSW v Brown (as official liquidator of Parkston Ltd) (in liquidation)
Solicitor’s lien over documents released to liquidator 73
Bennett & Co v CLC Corporation & Ors
Company mistakenly wound up twice by two different Courts 74
News Ltd (t/as Newsnet) v International Property Investment Corp Pty Ltd
(t/as Raine & Horne Investments (Qld))
Statutory derivative action available when company in liquidation 75
Roach v Winnote Pty Ltd (in liquidation)
Application to set aside appointment of liquidator 76
Metal Manufacturers Limited v ACN 063086126 Pty Ltd (in liquidation)
Liquidators entitled to remuneration in priority to registered mortgagees 78
Re Conlan (as liquidator of Oakleigh Acquisitions Pty Ltd)
No leave to proceed against CIC 80
Roots v Trussmaster Pty Ltd
Leave to proceed against HIH 82
Ibbco Trading Pty Ltd v HIH Casualty & General Insurance Ltd (in provisional liquidation)
What is a ‘contingent’ debt or claim? 83
Lofthouse (as liquidator of Main Jenkins Pty Ltd
(in liquidation)) v Commissioner of Taxation
Adjournment of winding up application of company in VA 85
Professional Advantage Pty Ltd v Agriculture.com Pty Ltd
Access by creditor to documents produced to liquidator 86
Re New Cap Reinsurance Corp Holdings Limited
Principle of anti-deprivation 87
Money Markets International Stockbrokers Limited (in liquidation) v London
Stock Exchange Limited & Anor
There are two sides to the story: take care when applying ex parte 89
Re HIH Casualty & General Insurance Ltd
Uncommercial Transactions, Preference Payments 90
and Disclaimer of Onerous Property
No unfair preference in light of ultimate effect 90
Beveridge v Whitton (as liquidator of HSBB Pty Limited (in liquidation))
Unfair preferences: Butcher almost lets abattoir off the hook 91
Mann & Anor v Sangria Pty Limited
Partly secured creditors and part payments 94
Walsh as liquidator of Mooney & Co Pty Ltd (in liquidation) v Natra Pty Limited
Still a preference - a security complex 96
G&M Aldridge Limited and Ors v Walsh
History of non-payment basis of successful defence 97
KEL Builders (QLD) Pty Ltd (in liquidation) v Brett Nash Electrics Pty Ltd
A sprinkle of fairy dust makes a transaction commercial 99
Peter Pan Management Pty Ltd (in liquidation) v Capital Finance Corp (Australia) Pty Ltd
Good faith defence and running accounts 101
Sutherland (as liquidator of Sydney Appliances Pty Ltd (in liquidation)) v Eurolinx Pty Ltd
Claw backs – for secured or unsecured creditors? 103
Jonsson v Tim Ferrier Pty Ltd
Extension of time to commence recovery proceedings 104
Brown & Anor v DML Resources Pty Ltd (in liquidation) & Anor (No. 2)
Unfair preferences: test for insolvency 106
Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation
Liquidators 108
Examining a liquidator’s intention to examine 108
Freshkept Technology Pty Limited (in liquidation); Goodwin as liquidator of
Freshkept Technology Pty Ltd (in liquidation)
Securing costs against an insolvent plaintiff 110
Health & Property Network Pty Limited v Pettingill
Court protects liquidator from spurious litigation after liquidation completed 111
Mamone v Pantzer
Personal liability of liquidator for group tax deductions 113
Deputy Commissioner of Taxation v Tideturn Pty Ltd
Liquidator’s costs: who gets paid when the broker goes broke 115
Re Greater West Insurance Brokers Pty Ltd
Supplier beware: liquidator not liable for company’s acts 117
Bell v Amberday Pty Ltd
Court recognises practical realities of a liquidator with no litigation funding 119
ACN 076 676 438 Pty Ltd (in liquidation) & Anor v A-Comms Teledata Pty Ltd & Anor
The limits of liquidators’ powers to conduct public examinations 121
Re Ezishop.Net Ltd
Liquidator’s rejection of proof of debt overturned 123
Re International Trade & Tenders (in liquidation); Elisjones v Green
Receivership 125
Student politicking: when will receivership be ordered in relation to funds in jeopardy? 125
The University of Technology Sydney v Gerrard
Moratorium benefits receivers where company in VA 127
Barrymores Pty Limited v Harris Scarfe Limited (administrators appointed)
(receivers and managers appointed)
No duty owed to shareholders 129
Blakeley v Cook & Ors
Jeogla revisited: the meaning of market value 131
Skinner v Jeogla Pty Limited
Priority of a receiver’s lien 133
Shawyer v Amberday Pty Limited (in liquidation)
Access to One.Tel documents 135
Hall v Sherman
Taking care when exercising a power of sale 137
Kyuss Express Pty Limited v Sellers & Anor
Oppressive conduct and receivership of associations 139
Liosatos v Kefalinian Brotherhood ‘O Kefalos’ of NSW
When can a receiver be discharged? 141
Re Botar - Tatham Pty Ltd
Statutory demands 143
Indemnity costs for incorrect statutory demand 143
Austrac Rail Pty Ltd v Hunter Premium Funding Ltd
A bet each way: setting aside statutory demands on conditions 144
Natcraft Pty Limited v WIN Television Pty Limited
Costs order made for issuing statutory demand on wrong company 145
Buddies Liquor Pty Ltd v Wah Lai Investment (Australia) Pty Ltd
Seeking a winding up order as an abuse of process 146
Redglove Holdings Pty Limited v GNE & Associates Pty Ltd
Court’s power to vary statutory demand 147
Satellite Group (Harold Park) Pty Ltd v Consolidated Constructions Pty Ltd
A statutory demand set aside in part 149
Progroup Management Pty Ltd v Metro Chemicals Pty Ltd
Setting aside a statutory demand requires facts and figures 151
Royal Premier Pty Ltd v Taleski
Can a statutory demand be served on an insurer or reinsurer for an unpaid claim? 153
Odyssey Re (Bermuda) Limited (Company No. 161930) v
Reinsurance Australia Corporation Limited