Category: Insolvency Law

Court approval of settlements in liquidations

The Supreme Court has confirmed that declarations can be made approving settlement payments and the mere fact that a liquidator has acted on incorrect advice will not preclude a settlement payment being regarded as an expense “properly incurred” for the purposes of s 556(1)(a) of the Corporations Act.

Insurers on the hook: High Court holds that insurers of insolvent companies can be joined to proceedings commenced by third parties against those companies

The High Court of Australia has held unanimously[1] that a person who commences proceedings against an insolvent company or a bankrupt individual can join that defendant’s insurer to the proceedings and seek a declaration that the insurer is liable to indemnify the defendant.

 

Automatic set-off is not that automatic

The decision is significant because it confirms that a payment of a dividend to a creditor does not necessarily extinguish the company’s claim for the balance in fact owing to it.