D
L
LEGAL PROFESSION
ADMISSION BOARD
LAW EXTENSION COMMITTEE
This Guide includes the Law Extension Committee’s course information and teaching program and the
Legal Profession Admission Board’s syllabus. The syllabus is contained under the heading “Prescribed
Topics and Course Outline” and has been prepared in accordance with Rule 27H(a) of the NSW
Admission Board Rules 2015.

1
The course deals with personal insolvency (bankruptcy) and corporate insolvency (covering both liquidation and non-liquidation arrangements). Insolvency law aims to recover funds for unsecured creditors, protect the insolvent during the course of administration and enquire into the circumstances of the insolvency.
The objective of the course is for students to be able to apply insolvency law to problems similar to those in legal practice, and to be able to give clear, accurate, plain English written advice to a lay client upon insolvency matters. This involves four aspects:

Identification of issues

Knowledge of the relevant law

Application of the law to the facts

Organisation and expression
The corporate insolvency component of this course deals with both liquidation and non-liquidation arrangements that have been brought about in consequence of company insolvency. In relation to liquidation arrangements, particular emphasis will be placed upon:

the distinction between voluntary and compulsory winding up;

the grounds upon which a company can be wound up;

procedure to obtain a winding up order including the use of statutory demands;

provisional liquidation;

the effects of winding up;
 liquidator’s powers and duties and the administration of the winding up;

assets available to the liquidator;

voidable transactions;

insolvent trading actions.
In relation to corporate insolvency resulting in non-liquidation arrangements being entered into, emphasis will be placed on the following:
 schemes of arrangement;
 receivership;
 voluntary administration;
 deeds of company arrangement.
The personal insolvency lectures include the following topics:
 solvency;

 acts of bankruptcy; bankruptcy notices;
 creditor’s petitions;
 the effects of bankruptcy;
 the doctrine of relation back;
 exempt transactions;
 transactions void against the trustee;
 termination of bankruptcy;
 voluntary personal insolvency ;
 cross-border insolvency;
 bankruptcy and family law.

2
Mr D J Russell SC BA LLB (Syd) Grad Cert Tertiary Teaching (Curtin)
Mr Russell is a barrister practising in Sydney. He holds the degrees of Bachelor of Arts and Bachelor of Laws and a Graduate Certificate in Tertiary Teaching. He is one of the authors of Corporations and
Associations: Principles and Issues, 6 th edition, LexisNexis 2015 and is the author of the Dust
Diseases chapter in LexisNexis Practical Guidance . He can be contacted at 7 th Floor Garfield Barwick
Chambers, DX 735 Sydney, telephone (02) 9224 5600, fax (02) 9223 3915 or by email: djrussell@7gbc.com.au
. He is the Examiner in this subject. Mr Michael Zammit is the Revising
Examiner.
To be eligible to sit for the Board’s examinations, all students must complete the LEC teaching and learning program, the first step of which is to ensure that you have registered online with the LEC in each subject for which you have enrolled with the Board. This gives you access to the full range of learning resources offered by the LEC.
To register with the LEC, go to www.sydney.edu.au/lec and click on the WEBCAMPUS link and follow the instructions. Detailed guides to the Webcampus are contained in the material distributed by the
LEC, in the Course Information Handbook , and on the Webcampus.
Eligibility to Sit for Examinations
In accordance with the Legal Profession Admission Rules , the LEC must be satisfied with a student ’s performance in a subject in order for the student to be eligible to sit for the examination, conducted by the Legal Profession Admission Board (LPAB). Assignments are used to assess eligibility.
Students are expected to achieve at least a pass mark of 50% in assignments to be eligible to sit for examinations. However, a category of “deemed eligible” has been introduced to offer students whose assignment mark is between 40-49% an opportunity to sit for the examination. In these circumstances students are often advised not to sit. A mark below 40% means a student is not eligible to sit for the examination.
Assignments as part of the Board’s Examinations
Assignment results contribute 20% to the final mark in each subject.
The Law Extension Committee (LEC) administers the setting and marking of assignments. The LEC engages the LPAB’s examiners to assess or supervise the assessment of assignments. Mr Russell will set and mark the assignment.
Submission
Assignments must be received by 11:59pm on the due date unless an extension has been granted.
Extensions must be requested by email prior to the due date. Specific supporting evidence must be provided. Assignments that are more than ten days late will not be accepted. Late assignments attract a penalty of one mark out of 20, or 5% of the total marks available, per day.
Assessment
Assignments are assessed according to the “Assignment Grading and Assessment Criteria” outlined in the Guide to the Presentation and Submission of Assignments . Prior to the examination, assignments will be returned to students and results posted on students’ individual results pages of the LEC Webcampus. Students are responsible for checking their results screen and ascertaining their eligibility to sit for the examination.

3
Review
Where a student’s overall mark after the examination is between 40-49%, the student’s assignment in that subject will be included in the Revising Examiner’s review. The final examination mark is determined in accordance with this review. Assignment marks will not otherwise be reviewed.
Candidates will be expected to have a detailed knowledge of the prescribed topics which are set out below.
Candidates will be expected to have made a study of the prescribed material in relation to those topics, and to have analysed the cases contained in the Law Extension Committee's course outline.
All enquiries in relation to examinations should be directed to the Legal Profession Admission Board.
Lectures in Insolvency will be held on Tuesdays from 6.00pm until 8.30pm, commencing on
10 November 2015. In the first half of the semester, lectures will be held in Architecture Lecture
Theatre 2, Faculty of Architecture, Design and Planning, in the Wilkinson Building, which is across City
Road on the Darlington Campus. Please refer to the map at https://sydney.edu.au/maps/embed/?building=G04 . Lectures after the study break will be held in New
Law School Lecture Theatre 104 (New LSLT 104).
Please note that this program is a general guide and may be varied according to need. Readings are suggested to introduce you to the material to be covered in the lecture, to enhance your understanding of the topic, and to encourage further reading. You should not rely on them alone.
References to “Keays” are references to Keay’s
Insolvency: Personal and
Corporate Law and
Practice, 8 th edition by
Murray & Harris, Thomson
1
2
10 Nov 
Welcome and introduction to the course

Solvency

Introduction to External Administration
Corporate Insolvency (Liquidation)

Compulsory Winding-up

Statutory Demands

Winding Up Procedures
17 Nov Corporate Insolvency (Liquidation)

Voluntary Liquidation
Reuters Law Book
Company 2014
Lecture 1 (PowerPoint)
Keays , 3-26, 338-373
Corporations Act Parts 5.4,
5.4B
Lecture 2 (PowerPoint)
Keays , 287-332

4
7
4

Provisional Liquidation
3

Administration of liquidations

Duties and powers of the liquidator

The effects of winding-up

Termination of the winding-up
24 Nov Corporate Insolvency (Liquidation)

Liability of directors for breach of duty

Insolvent trading

Criminal offences

Litigation funding
Corporations Act Part 5.6
Keays, 333-338, 375-385,
443-488
Corporations Act Part 5.5, ss 472, 536
Lecture 3 (PowerPoint)
Additional notes on insolvent trading (on
Webcampus)
Keays , 490-518
(2010) 18 Insolv LJ 96
Corporations Act Part 5.7B
5
6
1 Dec Corporate Insolvency (Liquidation)

Assets available to the liquidator

Void and voidable transactions
8 Dec Corporate Insolvency (non-liquidation arrangements)

Receivership and its effects on a company

Schemes of arrangement
15 Dec Corporate Insolvency (non-liquidation arrangements)

Voluntary administration

Deeds of company arrangement
Lecture 4 (PowerPoint)
Keays , 401-441
Corporations Act Part 5.7B
Lecture 5 (PowerPoint)
Keays , 535-600, 682-688
Corporations Act Parts 5.1 and 5.2
Lecture 6 (PowerPoint)
Keays , 601-724
Corporations Act Part 5.3A
12 Jan Personal Insolvency

History and purpose of bankruptcy law

Solvency
Lecture 7 (PowerPoint)
Keays , 3-26, 68-86

5
8
9

Course of a bankruptcy

Acts of bankruptcy

Bankruptcy notices
19 Jan Personal Insolvency

Creditors petitions

Debtors petitions

Course of a hearing

Vesting in the trustee

Effects of bankruptcy
26 Jan
No Lecture Scheduled – Australia Day Public Holiday
Bankruptcy Act , ss 5, 40,
41
Federal Court (Bankruptcy)
Rules 2005
Lecture 8 (PowerPoint)
Keays , 60-100, 101-116
Bankruptcy Act , ss 40, 41,
43, 44, 52, 55, 58
Federal Court (Bankruptcy)
Rules 2005
10 2 Feb
11 9 Feb
Personal Insolvency

Key dates in a bankruptcy

Relation back

Exempt transactions

Administration of the estate
Personal Insolvency

Transactions void against the trustee

Notices under s 139ZQ
Lecture 9 (PowerPoint)
Keays , 117-129, 163-212
Bankruptcy Act , ss 115,
116, 123-126
12 16 Feb Personal Insolvency

Termination of bankruptcy

Personal insolvency agreements

Debt agreements

Cross-border insolvency

Bankruptcy aspects of family law
Lecture 10 (PowerPoint)
Keays , 132-162
Bankruptcy Act , ss 120-
122, 128B-128C, 139ZQ
Lecture 11 (PowerPoint)
Keays , 213-234, 235-286
Bankruptcy Act , ss 149,
153A-153B, 154, 185C,
188A
Cross-Border Insolvency
Act 2008
Family Law Act 1975

6
13 23 Feb Revision – this will be conducted as a tutorial which considers past exam papers
Students will be expected to prepare draft answers to nominated past exam questions
There are two weekend schools principally for external students. Lecture students may also attend on the understanding that weekend classes aim to cover the topics covered in weekly lectures and are held primarily for the benefit of external students.
It may not be possible to cover the entire course at the weekend schools. These programs are a general guide and may be varied according to need. Readings are suggested to introduce you to the material to be covered in the lecture, to enhance your understanding of the topic and to encourage further reading. You should not rely on them alone.
4.10pm-5.20pm 
Welcome to the course

Solvency

Introduction to External Administration
Corporate Insolvency (Liquidation)

Compulsory Winding-up

Statutory Demands

Winding Up Procedures
5.30pm-6.35pm Corporate Insolvency (Liquidation)

Voluntary Liquidation

Provisional Liquidation

Administration of liquidations

Duties and powers of the liquidator

The effects of winding-up

Assets available to the liquidator

Termination of the winding-up

Corporate Insolvency (Liquidation)
6.45pm-8.00pm

Liability of directors for breach of duty

Insolvent trading

Criminal offences

Litigation funding
Lecture 1 (PowerPoint)
Keays , 3-26, 338-373
Corporations Act Parts 5.4, 5.4B
Lecture 2 (PowerPoint)
Keays , 287-332
Corporations Act Parts 5.5, 5.6
Keays , 333-338, 375-385, 443-
488
Corporations Act Part 5.5, ss 472,
536
Lecture 3 (PowerPoint)
Additional notes on insolvent trading (on Webcampus)
Keays , 490-518
(2010) 18 Insolv LJ 96
Corporations Act Part 5.7B

7
4.10pm-5.20pm
5.30pm-6.35pm
Corporate Insolvency (Liquidation)

Assets available to the liquidator

Void and voidable transactions
Corporate Insolvency (non-liquidation arrangements)

Receivership and its effects on a company

Schemes of arrangement
Lecture 4 (PowerPoint)
Keays , 401-441
Corporations Act Part 5.7B
Lecture 5 (PowerPoint)
Keays , 535-600, 682-688
Corporations Act Parts 5.1, 5.2
6.45pm-8.00pm
Corporate Insolvency (non-liquidation arrangements)


Voluntary administration
Deeds of company arrangement
Lecture 6 (PowerPoint)
Keays , 601-724
Corporations Act, Part 5.3A
4.10pm-5.20pm
5.30pm-6.35pm
6.45pm-8.00pm
Personal Insolvency

History and purpose of bankruptcy law

Solvency

Course of a bankruptcy

Acts of bankruptcy

Bankruptcy notices
Personal Insolvency
 Creditors’ petitions
 Debtors’ petitions

Course of a hearing

Vesting in the trustee

Effects of bankruptcy
Personal Insolvency

Administration of the estate

Key dates in a bankruptcy

Relation back
 Exempt transactions
Lecture 7 (PowerPoint)
Keays , 3-26, 68-86
Bankruptcy Act , ss 5, 40,41
Federal Court (Bankruptcy) Rules
2005
Lecture 8 (PowerPoint)
Keays , 60-100, 101-116
Bankruptcy Act , ss 40, 41, 43, 44,
52, 55, 58
Federal Court (Bankruptcy) Rules
2005
Lecture 9 (PowerPoint)
Keays , 117-129, 163-212
Bankruptcy Act , ss 115, 116, 123-
126

8
4.10pm-5.20pm
5.30pm-6.35pm
6.45pm-8.00pm
Personal Insolvency


Transactions void against the trustee
Notices under s 139ZQ
Personal Insolvency

Termination of bankruptcy

Personal insolvency agreements


Debt agreements
Bankruptcy aspects of cross-border insolvency

Bankruptcy aspects of family law
Revision – this will be conducted as a tutorial which considers past exam papers
Lecture 10 (PowerPoint)
Keays , 132-162
Bankruptcy Act , ss 120-122,
128B-128C, 139ZQ
Lecture 11 (PowerPoint)
Keays , 213-234, 235-286
Bankruptcy Act , ss 149, 153A-
153B, 154, 185C, 188A
Cross-Border Insolvency Act 2008
Family Law Act 1975
Students will be expected to prepare draft answers to nominated past exam questions
Course Materials
 PowerPoint lecture slides (available via the link to “Notes” in the Course Materials section of the
LEC Webcampus). The slides have hyperlinks to prescribed legislation and cases.

Supplementary Materials on Library E-reserve (avail able via the link to “Library” in the Course
Materials section of the LEC Webcampus)

Guide to the Presentation and Submission of Assignments (available on the LEC Webcampus)
Prescribed Materials

Murray, M. & Harris, J., Keay’s Insolvency: Personal and Corporate Law and Practice , 8th ed.
Thomson Reuters Law Book Co., 2014 (if you can only afford one book – this is it)

2015 Corporations Legislation (Annotated), Thomson Reuters

Nichols, P., Annotated Bankruptcy Act 1966 , 6th edition, LexisNexis

Cross-Border Insolvency Act 2008 (Cth)

Family Law Act 1975 (Cth)
Reference Material

Gooley, Russell, Dicker & Zammit, Corporations and Associations: Principles and Issues , 6th ed.
LexisNexis, 2015

Symes, C. and Duns, J., Australian Insolvency Law , 3rd edition, LexisNexis, 2015

The following are available via the University Library Law Databases:
 Australian Journal of Corporate Law (LexisNexis AU)
 Australian Law Journal (Westlaw AU)
 Insolvency Law Journal (Westlaw AU)
 Journal of Banking and Finance Law and Practice (Westlaw AU)
 Company and Securities Law Journal (Westlaw AU)
 McPherson’s Law of Company Liquidation (Westlaw AU)
 Crutchfield’s Voluntary Administration (Westlaw AU)
 Australian Commercial Law Tracker (CCH Online)
 Australian Insolvency Management Practice Newsletter (CCH Online)

Law Society Journal (available via special student login)

9
LEC Webcampus
Once you have registered online with the LEC, you will have full access to the LEC Webcampus facilities including links to lecture slides, cases and legislation relevant to Insolvency in the Course
Materials section.
The lecturer makes extensive use of the Webcampus Insolvency Forum to notify students of changed lecture arrangements, additional course material, new developments and past exam questions to be discussed in lectures. All students should ensure that they are registered for the Insolvency Forum. Sometimes the email notification system breaks down, so make your own frequent checks of the Insolvency Forum.
WARNING: This is a statute-driven subject. It will be impossible to understand the lectures, write the assignment or pass the exam unless you have copies of the Bankruptcy Act 1966 and the Corporations Act 2001 by your side.
In Insolvency, there is only ONE ASSIGNMENT. This assignment is compulsory and must be submitted by all students by the due date. A pass mark is 50%. Refer to the Guide to the
Presentation and Submission of Assignments for the assignment grading and assessment criteria. Students who fail to satisfy the compulsory requirement will be notified through the
Results screen on the Webcampus before the examination period of their ineligibility to sit the examination in this subject. The maximum word limit for the assignment is 2500 words
(inclusive of all footnotes but not bibliography).
The rules regarding the presentation of assignments and instructions on how to submit an assignment are set out in the LEC Guide to the Presentation and Submission of Assignments which can be accessed on the LEC Webcampus. Please read this guide carefully before completing and submitting an assignment.
The l ecturer’s requirements for the assignment will be discussed in Lecture 1.
The completed assignment should be lodged through the LEC Webcampus, arriving by 11:59pm on the following date:
Compulsory Assignment Wednesday 20 January 2016 (Week 8)
To obtain the Insolvency assignment questions for the Summer Session 2015-16, please follow the instructions below:
1. Register online with the LEC (see page 27 of the Course Information Handbook for detailed instructions). Once you have registered, you will have full access to all the facilities on the
LEC Webcampus.
2. Then go into the Webcampus, select the Course Materials section and click on the link to the assignment questions for this subject.

10
LECTURE 1
(Essential Reading: Lecture 1 (PowerPoint); Keays, 3-26, 338-373; Corporations Act Parts 5.4,
5.4B, 5.5)
WELCOME TO THE COURSE

Objectives of the course

Plain English explanations – Asprey, Plain Language For Lawyers, 5 th edition

The assignment

The exam
CORPORATE INSOLVENCY - INTRODUCTION TO EXTERNAL ADMINISTRATION

When is a company insolvent?
 Corporations Act s 95A
 The “cash flow” test
 Sandell v Porter [1966] HCA 28

Administration of the company by a person appointed to take over control from the directors:
 a receiver
 a receiver and manager
 an administrator
 a provisional liquidator
 a liquidator

The aims and purposes of liquidation

Types of liquidation
 Compulsory liquidation by court order
 Voluntary liquidation by members or by creditors

Who takes over from directors?
 Official liquidators
 Registered liquidators

11
CORPORATE INSOLVENCY (LIQUIDATION)
Compulsory winding-up

Winding-up in insolvency
 Corporations Act ss 459A, 459B, 459P, 461, 462

Eligible applicants
 Corporations Act s 459P

Presumptions of insolvency
 Corporations Act ss 459C
 Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corp Ltd [2008] HCA 9
 O'Gorman, K ., “ Sidestepping the Statutory Demand: Is Solvency a Solution ?” (2002)
10 Insolv LJ 239

Timing of application
 Corporations Act s 459C
 David Grant & Co Pty Ltd v Westpac (1995) 184 CLR 265

Statutory demands and procedure to set aside
 Statutory Demands Flow Chart [in Course Notes]
 Corporations Act Part 5.4 Divs 2 and 3 including ss 459E-S, 459G, 459H, 459J and
Form 509H
 Assaf, F., “ Setting Aside Statutory Demands: A Survival Guide ”, LSJ November 2009, p.64 [in Course Notes]
 Topfelt Pty Ltd v State Bank of NSW Ltd [1993] FCA 43
 Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund [1996]
FCA 822
 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 [in Course Notes]
 Britten-Norman Pty Ltd v Analysis & Technology Pty Ltd [2013] NSWCA 344
 Main Camp Tea Tree Oil Ltd v Australian Rural Group Ltd [2002] NSWSC 219
 Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corp Ltd [2008] HCA 9
 ASIC v Lanepoint Enterprises Pty Ltd [2011] HCA 18

12
CORPORATE INSOLVENCY (LIQUIDATION) (CONTINUED)
Winding-up procedures

Part 5.4B

Applicants
 Corporations Act s 459P
 By ASIC – s 489EA (corporate phoenixing amendment)

Applying for winding-up
 Corporations Act s 465A

Opposition to winding-up
 Corporations Act s 465C

Injunction to prevent winding-up

The hearing
 Corporations Act ss 440A, 459A, 459R, 467

Discretion of court
 Corporations Act s 459A
 Abuse of process
 Tender of payment
 Interests of other creditors
 Corporations Act ss 465B, 467, 490, 459S, 547
 Switz v Glowbind Pty Ltd [2000] NSWCA 37
 Substituting creditors – s 465B

The order
 Corporations Act ss 466-470, 472, 474
 Corporations Winding Up Guide [in Course Notes]
LECTURE 2
(Essential Reading: Lecture 2 (PowerPoint); Keays, 287-332, 333-338, 375-385, 443-488;
Corporations Act Part 5.6, Part 5.5, ss 472, 536)
Voluntary Winding-Up
 Members’ voluntary winding-up
 Corporations Act ss 249H(1), 491, 494-496

13
 Creditors’ voluntary winding-up
 Corporations Act Part 2G.2, ss 491-497, 506A, reg 5.6.23-5.6.27
Provisional Liquidation

Background

Who can apply
 Members
 Creditors – note undertakings as to damages
 The company

Effect of an appointment
 on company officers
 proceedings against the company

The provisional liquidator
 Corporations Act ss 537-540
 Duty to exercise discretion
 Powers – Corporations Act s 472

End of appointment
Administration of liquidations

Australian Securities and Investments Commission

The Companies Auditors and Liquidators Disciplinary Board

The courts

General meeting of the company

Committees of inspection

ARITA - Australian Restructuring Insolvency & Turnaround Association (formerly IPA)
The liquidator

Appointment

Independence

Functions

Duties of the liquidator

Powers of the liquidator

14

Voluntary liquidators

Supervision of the liquidator

Removal of liquidators

Remuneration of liquidators

Senate Report on the corporate insolvency industry, September 2010

Insolvency Reform Bill 2013 Explanatory Material [in Course Notes]
The administration of the winding-up

Initial tasks of the liquidator
 Examining the books of the company – see Corporations Act ss 483, 530A
 Taking possession of property – see Corporations Act ss 478, 483, 530C
 Giving notice

Relations with creditors
 Rights of creditors – see Keays [15.45]
 Meeting of creditors – see Corporations Act ss 496, 497, 508, 509, Corporations
Regulations 2001 Clauses 5.6.10 - 5.6.33

Notice

Investigations
 Preliminary report to ASIC – see Corporations Act s 476
 Further report to ASIC – see Corporations Act s 533

Examinations
 Corporations Act s 596A
 Corporations Act s 596B
 Procedure – “examinable affairs” – see Corporations Act s 597; privilege

Disclaimer of assets
 Corporations Act ss 568, 568A
 Challenge to disclaimer – Corporations Act s 568B and E
 Effect of disclaimer – Corporations Act s 568C

Carrying on business
 Corporations Act ss 477, 493

Realising the assets
 Corporations Act s 477

15

Claims of creditors
 Corporations Act ss 553-554J

Distribution of the estate
 Corporations Act ss 555, 556, 560, 564, 581
 Debts owed to members come last – s 563A
 Sons of Gwalia Ltd v Margaretic [2007] HCA 1
 Corporations Amendment (Sons of Gwalia) Act 2010
 Priority of creditors s 556
 Court power to displace priorities s 564
The effects of winding-up

Effect on the company’s business
 Corporations Act ss 161A, 468, 471B, 477, 493, 541

Effect on the directors and other officers
 Corporations Act ss 471A, 475, 483, 499, 530A

Effect on the members
 Corporations Act ss 468A, 493, 515

Effect on the creditors
 Corporations Act ss 468(4), 471B, 471C, 500(2). See also s 16 Cross-Border
Insolvency Act

Effect on employees
 Corporations Act ss 475, 530A

Effect on contracts
Termination of the Winding-Up

By the Court
 Corporations Act s 482

Deregistration
 By ASIC – ss 480(d), 601AB
 Destruction of the corporate existence – s 601AD

Reinstatement
 Corporations Act s 601AH

16

Claims against insurers of deregistered companies – s 601AG
 Tzaidis v Child [2009] NSWSC 465
LECTURE 3
(Essential Reading: Lecture 3 (PowerPoint); Additional Webcampus notes on insolvent trading, Keays, 490-518; (2010) 18 Insolv L J 96; Corporations Act Part 5.7B)
CORPORATE INSOLVENCY (LIQUIDATION) (CONTINUED)

Lifting the corporate veil

Liability of directors for breach of duty
 Common law duties
 Statutory duties – Corporations Act ss 180, 181, 182, 183
 Civil liability of directors – ss 1317G, 1317G, 1317J
 ATO directors penalty notices (including 2012 changes)

Insolvent trading
 Corporations Act s 588G – the four criteria
 Edwards v ASIC [2009] NSWCA 424
 Indicators of insolvency – ASIC v Plymin [2003] VSC 123
 Defences – s 588H
 Forgiveness – ss 1317S, 1318
 Hall v Poolman [2007] NSWSC 1330
 McLellan, in the matter of The Stake Man Pty Ltd [2009] FCA 1415
 Morrison, “ Directors’ Liability for Insolvent Trading, Statutory Forgiveness, and Law
Reform ” (2010) 18 Insolv LJ 96 [in Course Notes]
 Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2011] NSWCA
109
 Compensation may be sought by ASIC or by the liquidator – ss 588M, 588R, 588Y
 ASIC Regulatory Guide 217 [in Course Notes]

Criminal Offences
 Prosecution by ASIC – ss 1313, 1315, 590

Outline of litigation funding
 Campbells Cash & Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41

17
LECTURE 4
(Essential Reading: Lecture 4 (PowerPoint); Keays, 401-441; Corporations Act Part 5.7B)
CORPORATE INSOLVENCY (LIQUIDATION) (CONTINUED)
Assets available to the liquidator

Assets of the company
 Property held in trust
 Retention of title

Recovery by avoiding pre-liquidation transactions
 Corporations Act Part 5.7B Div 2
 See diagram on page 407 Keays

Unfair preferences
 Corporations Act s 588FA
 Conditions for a preference
 Transaction – Corporations Act s 9
 Insolvent transaction under s 588FC
 Presumptions of insolvency – s 588E
 Dean-Willcocks v Air Transport International [2002] NSWSC 525
 The transaction must have occurred within the relevant six month period (s
588FE(2)) or four year extended period (s 588FE(4))
 The creditor must be preferred
 Running accounts – Corporations Act s 588FA(3) and Sims v ABC Tissue Products Pty
Limited [2008] NSWSC 192

Uncommercial transactions
 Corporations Act ss 588FB; 588FC and 588FE
 Demondrille Nominees Pty Ltd v Shirlaw [1997] FCA 1220

Defeating or delaying or obstructing creditors
 Corporations Act s 588FE(5)

Unfair loans
 Corporations Act s 588FD

Unreasonable director-related transactions

18
 Corporations Act s 588FDA

Voidable transactions during voluntary administration and deed of company arrangement
 Corporations Act s 588FE

Avoidance of certain circulating security interests (“floating charges”)
 Corporations Act s 588FJ

Court orders
 Corporations Act s 588FF

Defences
 Corporations Act s 588FG
 Sutherland v Eurolinx Pty Ltd [2001] NSWSC 230
 Cussen v Commissioner of Taxation [2004] NSWCA 383
 Queensland Bacon Pty Ltd v Rees [1996] HCA 21
Other types of void dispositions (apart from Part 5.7B)

Proceeds of execution – s 569

Recoveries from sheriffs – s 570
 Rodionoff, P., “ Resisting Liquidators’ Claims for Recovery of Unfair Preferences ” , LSJ
February 2010, p.69 [in Course Notes]

Dispositions after commencement of winding up – s 468

Invalidation of pre-2012 charges – s 267
LECTURE 5
(Essential Reading: Lecture 5 (PowerPoint); Keays, 535-600, 682-688, Corporations Act Parts
5.1, 5.2)
CORPORATE INSOLVENCY (NON-LIQUIDATION ARRANGEMENTS)
Receivership

Corporations Act Part 5.2

General role of a receiver

Receivers - privately appointed or court appointed
 when will a receiver be appointed privately or by the court

Receivers and receivers and managers

19

Privately appointed receivers appointed under debentures
 Debentures conferring a charge
 Appointment under the debenture
 Manner of appointment
 Demand deeds
 Qualification for appointment as receiver – Corporations Act s 418
 Formalities of appointment – Corporations Act ss 427, 429
 Validity of appointment
 Remedying invalid appointments
 Verifying appointments – Corporations Act s 418A
 Role and position of a privately appointed receiver – Corporations Act s 420C
 Effect of appointment
 on company officers – Corporations Act s 429(2)(b)
 on company property
 on creditors
 on pre-existing contracts
 on employees
 on the company
 Powers, duties and liabilities of a privately appointed receiver – Corporations Act ss
180-184, 420, 420A, 422, 424, 425, 429, 431, 432
 Liabilities - Corporations Act ss 419, 419A, 423, 433, 588G, 598
 Relief from liability – Corporations Act ss 419, 419A, 1318
 Administration of a receivership
 Termination of receivership

Receivers appointed by the court - Corporations Act s 1323
 When can a receiver be appointed – National Australia Bank Ltd v Bond Brewing
Holdings Ltd [1991] 1 VR 386
 The appointee - Corporations Act s 427
 Role and position of a court-appointed receiver
 Effect of appointment
 Powers, duties and liabilities of a court-appointed receiver – Corporations Act s 120
 Liabilities

20
 Relief from liability
 Administration of a receivership
 Termination of receivership
Schemes of arrangement

Corporations Act Part 5.1

Advantages and aims of schemes of arrangement

Types of arrangements

Procedure to implement a scheme of arrangement
 Corporations Act ss 411, 412
 CSR Limited , in the matter of CSR Limited [2010] FCA 33

The scheme administrator
 Corporations Act ss 411, 415, 425, 427(4), 432, 434, 536, 588G, 589(1)(g), 1318, 1321

Termination of a scheme of arrangement
LECTURE 6
(Essential Reading: Lecture 6 (PowerPoint), Keays, 601-724; Corporations Act Part 5.3A)
CORPORATE INSOLVENCY (NON-LIQUIDATION ARRANGEMENTS) (CONTINUED)
Voluntary administration

Corporations Act Part 5.3A

The objects and aims of Part 5.3A

Invoking Part 5.3A - Corporations Act s 436A

Overview of the administration process – note diagram on page 606 of Keays

Commencement and termination of the administration

The effect of the administration
 on the company and its members
 on general dealings with company’s property – Corporations Act s 437D
 on transactions of the company
 on company officers
 on the company employees

21
 on the company's creditors

The administrator – Corporations Act ss 449B-449E

Statutory moratorium – Corporations Act s 440D

Role and powers of the court – Corporations Act ss 447A-447E
Deeds of company arrangement

Corporations Act Part 5.3A

Types of deeds

Advantages of deeds

The outcome of the second meeting of creditors – Corporations Act ss 430A, 444A, 444B,
446A, 448A

Effects of the deed - Corporations Act s 435C
 on the company – Corporations Act ss 444G, 450E, 161A
 on the directors – Corporations Act ss 444G, 444GA, 444J
 on the initiation of proceedings by creditors – Corporations Act s 444D
 on secured creditors – Corporations Act ss 444D, 444F
 on owners and lessors – Corporations Act ss 444D, 444F
 on guarantees - Corporations Act ss 444H, 444J

The deed administrator – Corporations Act ss 180-81, 444A, Sch 8A Corporations
Regulations

Examinations – Corporations Act ss 596A and 596B

Administration of the deed – Sch 8A Corporations Regulations

Variation of the deed – Corporations Act ss 445F, 447A

Determination and avoidance of the deed – Corporations Act ss 445C, 445D, 445E, 445FA,
445G, 447A

2010 “Safe Harbour” Government proposal
LECTURE 7
(Essential Reading: Lecture 7 (PowerPoint); Keays, 3-26, 68-86; Bankruptcy Act ss 5, 40, 41)
PERSONAL INSOLVENCY
History and purpose of bankruptcy law

Pari passu distribution; Protection; Investigation; Restrictions on dealings

22

Interaction with contract, property, insurance, family, tax and superannuation law

Solvency

Ability to pay all debts as and when they become due and payable

Bankruptcy Act 1966 s 5

Sandell v Porter [1966] HCA 28
Course of a bankruptcy

Voluntary and compulsory bankruptcy

Acts of bankruptcy; Sequestration orders; Vesting of property; Realisation of assets;
Payment of dividends; Discharge
Acts of bankruptcy

Bankruptcy Act 1966 s 40(1)

Failure to comply with a bankruptcy notice – s 40(1)(g)
Bankruptcy notices

Formal requirements – Bankruptcy Act 1966 s 41, Form 1
 Minimum amount: Autron Pty Ltd v Benk [2011] FCAFC 93

Service – Bankruptcy Regulation 16.01

Defects or irregularities - Bankruptcy Act 1966 s 306
 Kleinwort Benson Australia v Crowl [1988] HCA 34
 Adams v Lambert [2006] HCA 10
 Skouloudis v St George Bank Ltd [2008] FCA 1765

Challenging bankruptcy notices
 Bankruptcy Act s 41

Counter claims
 Ebert v Union Trustee [1960] HCA 50
 Guss v Johnstone [2000] HCA 26

Federal Court (Bankruptcy) Rules 2005 Part 3

23
LECTURE 8
(Essential Reading: Lecture 8 (PowerPoint); Keays, 60-100, 101-116; Bankruptcy Act ss 40, 41,
43, 44, 52, 55, Federal Court (Bankruptcy) Rules 2005)
PERSONAL INSOLVENCY (CONTINUED)
Creditors’ petitions

Formal requirements
 Bankruptcy Act 1966 s 52

Service

Going behind the judgment
 Wren v Mahony [1972] HCA 5
 Udovenko v Mitchell [1997] FCA 1312

Solvency
 Re Sarina [1980] FCA 66

Federal Court (Bankruptcy) Rules 2005 Part 4
Debtors’ petitions

Formal requirements
 Bankruptcy Act 1966 s 55

Preventing abuse of process
 Clyne v DFCT [1984] HCA 4
 BWK Elders (Australia) Pty Ltd v White [2004] FCA 1611
Course of a hearing

A typical hearing

Federal Court (Bankruptcy) Rules 2005; Bankruptcy Forms
 Creditor’s Petition Checklist [in Course Notes]
Effects of Bankruptcy

Property vests in the Trustee – s 58

On the bankrupt

On legal proceedings

On property

24
LECTURE 9
(Essential Reading: Lecture 9 (PowerPoint); Keays, 117-129, 163-212; Bankruptcy Act ss 115,
116, 123-126)
PERSONAL INSOLVENCY (CONTINUED)
Administration of the Estate

Statement of affairs – Bankruptcy Act s 54(1)

Investigations
 Private examinations – s 77C
 Public examinations – s 81

Income of the bankrupt
 The supervised account regime
 Claims of creditors
 Debts provable in bankruptcy – s 82(1)
 Non-provable claims – s 82(2)
 Secured creditors – s 58(5)
 Proofs of debt – s 84(1)

Distribution of the estate
 Payment of dividends
 Special priorities – s 109
Key dates in a bankruptcy

Acts of bankruptcy; commencement of the bankruptcy; date of the bankruptcy
 Bankruptcy Act ss 5, 115, 116
Relation back
 Bankruptcy Act s 115
 Re Pollit (see Nichols 356)
 Ponsford Baker & Co v Union of London and Smith’s Bank Ltd (1906) 2 Ch 444 (see
Nichols 356)
 Anscor Ltd v Clout [2004] FCAFC 71

Property divisible amongst creditors
 Bankruptcy Act s 116

25
Exempt transactions

Bankruptcy Act 1966 ss 123-124

In good faith and in the ordinary course of business
 Robertson v Grigg [1932] HCA 29
 Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd [1948] HCA 14
 Queensland Bacon Pty Ltd v Rees [1966] HCA 21
LECTURE 10
Essential Reading: Lecture 10 (PowerPoint); Keays, 132-162; Bankruptcy Act ss 120, 121, 122,
128A-128C, 139ZQ)
PERSONAL INSOLVENCY (CONTINUED)
Transactions void against the trustee
 “Void” and “voidable”

Bankruptcy Act 1966 s 120 - undervalued transactions
 Anscor Pty Ltd v Clout [2004] FCAFC 71

Bankruptcy Act 1966 s 121 – transfers to defeat creditors
 Cummins (a Bankrupt) v Cummins [2006] HCA 6

Bankruptcy Act 1966 s 122 – preferences

Protection for some purchasers – good faith, ordinary course of business, valuable consideration
 Robertson v Grigg [1932] HCA 29
 Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd [1948] HCA 14
 Queensland Bacon Pty Ltd v Rees [1966] HCA 21

Bankruptcy Act 1966 s 128B, 128C – superannuation contributions

Time limits for challenging void transactions – ss 127, 128D
Notices Under s 139ZQ

An administrative recovery process for void transactions

Requirements of a valid s 139ZQ Notice

Challenging the Notice – s 139ZS
 Vale v Sutherland [2009] HCA 26

26
LECTURE 11
(Essential Reading: Lecture 11 (PowerPoint); Keays, 213-234, 235-286; Bankruptcy Act ss 149,
153A-153B, 154, 185C, 188A; Cross-Border Insolvency Act 2008; Family Law Act 1975)
PERSONAL INSOLVENCY (CONTINUED)
Termination of bankruptcy

Discharge - Bankruptcy Act 1966 s 149

Objections to discharge - Bankruptcy Act 1966 s 149D

Effect of discharge – Bankruptcy Act 1966 s 153

Annulment - Bankruptcy Act 1966 ss 153A, 153B

Effect of annulment – Bankruptcy Act s 154

Annulment for abuse of process
 Clyne v DFCT [1984] HCA 44

Section 74 annulment
Personal insolvency agreements

Bankruptcy Act 1966 Part X
Debt agreements

Bankruptcy Act 1966 Part IX
Bankruptcy aspects of cross-border insolvency

Cross-Border Insolvency Act 2008

The UNICTRAL Model Law – adopted by the Cross-Border Insolvency Act 2008

Operation of the Model Law
 Centre of main interest
 Foreign main proceedings
 Foreign non-main proceedings

Australian elements grafted onto the Model Law
 Katayama v Japan Airlines Corporation [2010] FCA 794

27
Bankruptcy and family law

Family Law Act 1975
 Trustee as a party to family law proceedings
 Creditors – orders binding on third parties
 Setting aside or restraining transactions
 Position of the non-bankrupt spouse
 Contributions to a marriage
 Claw back provisions – s 79A Family Law Act
(LECTURE 12) REVISION TUTORIAL (LAST LECTURE BEFORE EXAM)
The course has 11 formal lectures and a revision tutorial. Students will be advised beforehand of a list of past exam questions which will be discussed in a tutorial style session. Students will be expected to prepare draft answers to the nominated past questions and contribute to discussion.