Insolvency Law

  • Professional indemnity insurers to be joined in insolvent trading claims

    The defendants to insolvent trading claims or negligence claims brought by insolvency practitioners are often people who hold professional indemnity insurance such as company directors, solicitors, accountants or other professionals.

    However, an insolvency practitioner is not usually entitled to make a claim on a person’s insurance policy directly, even where the insolvent trading or negligence claim is well-founded or admitted. The insolvency practitioner is considered a stranger to the insurance policy contract.

  • Cross-Border Insolvency highlighted by Edelsten case

    On 3 September 2014, Soneet Kapila, the United States trustee in bankruptcy for Geoffrey Edelsten, issued an application in the Federal Court of Australia for recognition of a foreign bankruptcy proceeding in Australia after Mr Edelsten was made bankrupt in the United States. It is alleged that Mr Edelsten owes significant sums to around 40 creditors.

  • Receiver appointed for Banksia Securities

    At the request of the Board of Banksia Securities Limited, the company’s trustee for debenture holders has appointed receivers and managers from the accounting firm McGrath Nicol to take charge of the assets of Banksia Securities.

  • In a Members’ Voluntary Winding up, a Shareholder is a Creditor

    In Re BM2008 Pty Ltd (in liq) [2010] VSC 337 (11 August 2010), Davies J of the Supreme Court of Victoria was asked to adjudicate as to whether a shareholder in a members’ voluntary winding up of a company (i.e., where the company is solvent) who has no claim against the company apart from the right to a share in the distribution of the company’s surplus assets is a ‘creditor’ of the company.

  • Bankruptcy Law Reform: Parliament Raises Threshold to $5,000

    On 24 June 2010, Federal Parliament passed the Bankruptcy Amendment Bill 2009. Among the amendments included in the bill is an increase in the threshold of indebtedness entitling a creditor to issue a Bankruptcy Notice and a Creditor’s Petition, which are the two significant steps in the most commonly employed process by which a creditor may obtain a sequestration order against a debtor — or, in simple terms, make the debtor bankrupt.