ANNUAL REVIEW OF INSOLVENCY & RESTRUCTURING LAW 2005 ANNUAL REVIEW OF INSOLVENCY & RESTRUCTURING LAW 2005 LAW &RESTRUCTURING INSOLVENCY OF REVIEW ANNUAL 9423 Insolvency 5 cover.indd 1 7/03/2006, 12:59:59 PM For further information about In sol ven cy & Restructuring Law, please contact: SYDNEY BRISBANE Andrew Boxall Alf Pappalardo Ph: +61 2 9230 4534 Ph: +61 7 3334 3269 [email protected] [email protected] Jim Dunstan Geoff Rankin Ph: +61 2 9230 4571 Ph: +61 7 3334 3235 [email protected] [email protected] Paul Nicols Sandy Wilson Ph: +61 2 9230 4414 Ph: +61 7 3334 3229 [email protected] [email protected] Michael Quinlan Ph: +61 2 9230 4411 MELBOURNE [email protected] Tania Cini Ian Wallace Ph: +61 3 9613 8574 Ph: +61 2 9230 4712 [email protected] [email protected] Anne Ferguson John Warde Ph: +61 3 9613 8890 Ph: +61 2 9230 4892 [email protected] [email protected] Clint Hinchen HONG KONG Ph: +61 3 9613 8924 [email protected] Simon McConnell Ph: +852 2840 1202 Simon Lynch [email protected] Ph: +61 3 9613 8922 [email protected] PERTH Steven Cole SINGAPORE Ph: +61 8 9488 3743 Steve Pemberton [email protected] Ph: +65 6535 6622 David Martino [email protected] Ph: +61 8 9488 3808 [email protected] Visit our website at www.aar.com.au/services/insolv/ for: • An electronic version of this Review at http://www.aar.com.au/pubs/arir/ • Electronic versions of past editions of this Review • Papers delivered at our regular forums and newsletters covering new cases and legislative developments We would very much like your feedback on this Review. If you would like further information about our regular forums on Insolvency & Restructuring Law, please contact: Marlo Rowarth on +61 3 9613 8545 or Kirsten Murfi tt on +61 2 9230 4703. 9423 Insolvency 5 cover.indd 2 7/03/2006, 1:00:03 PM ANNUAL REVIEW OF INSOLVENCY & RESTRUCTURING LAW 2005 Also available online at: http://www.aar.com.au/pubs/arir/ 9423 Insolvency 1 front section.indd 1 7/03/2006, 1:00:31 PM © Allens Arthur Robinson 2006 Written and published by Allens Arthur Robinson Deutsche Bank Place, 126 Phillip Street, Sydney NSW 2000 www.aar.com.au 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 defi nitive advice on the law. It is rec om mend ed that readers seek specifi c advice in relation to any legal matter they are handling. 9423 Insolvency 1 front section.indd 2 7/03/2006, 1:00:35 PM PREFACE It gives us great pleasure to introduce the latest edition of Allens Arthur Robinson’s Annual Review of Insolvency & Restructuring Law. The Review reports on court decisions of interest and examines developments in Australia, the Asia Pacifi c Region and globally which occurred during 2005. Now in its seventh year, the publication of the Review has become a well-known fi xture on the insolvency and restructuring industry calendar. We hope that in keeping with previous editions, this year’s edition will prove to be a useful resource for insolvency practitioners, bankers, other fi nanciers, credit managers, corporate counsel and members of the business community who conduct business in Australia and throughout the Asia Pacifi c region. As with our previous Reviews, a full online version of this edition can be found at http://www.aar.com.au/pubs/arir/. The year 2005 produced a number of important insolvency and restructuring decisions, including: • the Sons of Gwalia, Media World, Concept Sports and Johnston decisions relating to claims by shareholders; • the House of Lords decision of Spectrum Plus on security over book debts; • the Motor Group decision on deeming warranty holders as creditors; • the cross-border insolvency decisions in Independent Insurance and Re HIH Casualty and General Insurance Ltd; • the Thiess Infraco decision on proofs of debt for loss of profi ts; and • the IMF/Sons of Gwalia decision on access to registers of members. Australia’s insolvency and restructuring laws were again the focus of attention during 2005, notable developments being: • the publication in May of the Corporations and Markets Advisory Committee (CAMAC) discussion papers on Personal Liability for Corporate Fault and on Corporate Duties Below Board Level; • the release in October of the integrated Insolvency Reform Package by the Federal Government; • the referral to CAMAC by the Parliamentary Secretary to the Treasurer in October of a proposed set of changes to the Corporations Act arising out of the Special Commission of Inquiry into the Medical Research and Compensation Foundation; and • ASIC’s introduction of a new policy on liquidator registration. These developments (and many more) are examined in this Review. The Australian economy has continued to experience growth, a particular feature being the continuing high level of demand in the resources sector. Having said that, there has been a tightening in some sectors, including the retail, wine, automotive, housing construction and mezzanine fi nance industries. Even the mining sector has not been immune from experiencing some challenges. In addition, the generally fl at housing market and rising oil prices may sound a note of caution to business and lenders for the coming year. We thank all of the partners, senior associates, lawyers, research assistants and summer clerks at Allens Arthur Robinson who have contributed to this publication. Special thanks to Della Stanley who selected many of the important decisions for 2005 and for coordinating the Developments section of this Review. Also thanks to Anne Ferguson in Melbourne, Joseph Garas in Perth, Michael Ilott in Brisbane and Ash Tehrani in Sydney for their signifi cant contribution. Thanks also to Marlo Rowarth for helping keep the Review on track for its March 2006 launch. Special thanks also for their hard work, patience and good humour – despite tight deadlines, to the Publications team led by Melinda Woledge and the Design team led by Kelly Royle. We hope that you fi nd the Review an informative and useful reference tool. As always, we welcome your feedback and comment, and we look forward to the opportunity to work with you as clients of our insolvency and restructuring practice in 2006. John Warde Kim Reid Partner and co-editor Senior Associate and co-editor March 2006 9423 Insolvency 1 front section.indd 3 7/03/2006, 1:00:35 PM EDITORS John Warde Kim Reid CONTRIBUTORS Matthew Barnard Perry Herzfeld Catherine Parr Peter Beacroft Holly van den Heuvel Joshua Pileggi Elizabeth Bennett Sarah Hine Michael Popkin Sarah Bergin Tim Holden Chris Prestwich Hamish Bevan Patrick Holmes Georgia Price Katrina Bobeff Katherine Horne Michael Quinlan Carla Bongiorno Michael Ilott Gavin Rakoczy Laura Brown Damian Jacobs Kim Reid Nico Burmeister Aurelie Jacquet Ian Roberts Lisa Button Peter Jones Sophie Ryan Steven Cheng Simon Keizer David Salter Joanne Chin Robert Kerr Annett Schmiedel Margot Clarkson Margot King Ben Schokman David Clifford Timothy Knowles Robert Speed Gabi Crafti Joanne Little Della Stanley Michael Cresswell Trudi Lodge Christine Swan Meredith Dodds Diccon Loxton Annie Tan Frances Eardley Banjo McLachlan Joe Tan Chris Erfurt Matthew McLennan Kenneth Tang Anne Ferguson Lucy McKernan Ash Tehrani Vanessa Filippin Claudia Mackie Anna Thwaites Steven Fleming David Martino Zane Turner Victoria Foster Edward Moon Christa Walker Joseph Garas Ric Morgan John Warde Dayna Hall Patricia Neurauter Skye Watson Richard Harris Elliot Norton Liam Young Michael Helleman Sonya Oberekar 9423 Insolvency 1 front section.indd 5 7/03/2006, 1:00:37 PM ALLENS ARTHUR ROBINSON INSOLVENCY & RESTRUCTURING Allens Arthur Robinson (AAR) has been servicing clients in Australia for 180 years and in the Asia Pacifi c region for the past three decades. AAR is one of the largest law fi rms in the Asia Pacifi c region, with 190 partners and more than 600 other legal staff. We provide a full range of commercial legal services to many of the region’s leading corporations and government organisations, including more than half of Australia’s, and a dozen of the world’s, top 100 companies. Banks, corporations, directors, receivers, administrators, creditors and liquidators know our reputation for rapid response and quality work in insolvency and restructuring. If you are dealing with troubled corporations in Australia, the Asia Pacifi c or internationally, our experienced team can work with you to provide the fast, effective solutions you require. Our commitment is to provide a team, on the ground, to manage the critical stages of a matter. Experienced insolvency and restructuring lawyers are backed by the fi rm’s specialists in relevant industries and areas of law. Our expertise extends to every corporate insolvency situation; we have handled some of Australia’s and South East Asia’s most signifi cant insolvencies and restructures in recent years. We have acted in numerous corporate restructurings: our detailed knowledge of corporate and tax law helping our clients to achieve results with certainty and speed. Our dealings with international corporate groups have kept us at the leading edge of global trends in corporate restructuring. Partner, Brisbane Partner, Sydney Geoffrey Rankin Michael Quinlan National Practice Leader Ph: +61 7 3334 3235 Deputy Practice Leader Ph: +61 2 9230 4411 [email protected] [email protected] Partner, Sydney Partner, Melbourne Partner, Perth Andrew Boxall Ph: +61 2 9230 4534 Tania