It is common in construction and commercial leasing transactions for a party to provide an unconditional bank guarantee to secure the performance of their contractual obligations.
It is common for commercial contracts to contain ipso facto clauses, which allow a party to terminate or modify the terms of the contract where the other party experiences an insolvency event. A concern addressed by the Government is that these clauses can prevent a financially distressed company from turning their situation around.
In a recent case in the District Court of Queensland, a lender failed to prove it had served default notices. The lender was unsuccessful in obtaining summary judgment for the loan debt and possession of the mortgaged property.
The High Court’s recent decision in Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28 has confirmed a bankruptcy court can exercise a discretion to go behind the judgment debt where sufficient reason is shown for questioning whether there is a debt due to the petitioning creditor.
In the recent decision of Lane (Trustee), in the matter of Lee (Bankrupt) v Deputy Commissioner of Taxation [2017] FCA 953, Cooper Grace Ward acted for the trustee in bankruptcy, who sought directions from the Court regarding the administration of a trading trust where the bankrupt was the trustee.
Section 477(2B) of the Corporations Act 2001 (Cth) provides that a liquidator must not enter into any sort of agreement that may last longer than three months without first obtaining approval of the Court, of the committee of inspection or by a resolution of the creditors.
All Australian states have sale of goods legislation that, in certain circumstances, allows an unpaid seller to retain possession of goods in transit where the buyer becomes insolvent. The statutory right, called stoppage in transitu, is a useful remedy to obtain payment.
Competing claims to goods are common where there is an unpaid seller with alleged retention of title, the supplier’s customer has gone into external administration and the goods are in the possession of a transport or warehouse provider. Thrown into the mix may be an administrator or liquidator demanding possession of the goods to sell them.
From 1 July 2017, the Farm Business Debt Mediation Act 2017 (Qld) will require mortgagees to offer to engage in mediation with mortgagor farmers before commencing any enforcement action to recover outstanding farm business debts.
The PPS Bill that proposed amendments to the meaning of a ‘PPS Lease’ in the Personal Property Securities Act has been passed.
On 23 March 2017, Justice Robson of the Supreme Court of Victoria declined to follow the Victorian Court of Appeal decision of Re Enhill, finding that the decision was not binding with respect to different legislation (the Companies Act 1961 (Vic) as opposed to the Corporations Act 2001 (Cth)).
On 17 March, in Hambleton v Finn [2017] QDC 61, McGill SC DCJ of the District Court of Queensland applied the section 553C(1) setoff under the Corporations Act 2001 to a liquidator’s insolvent trading claim against a director.