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Cross Border Insolvency Update - October 2019

AWH Fund Ltd (In Compulsory Liquidation) v ZCM Asset Holding Company (Bermuda) Ltd (Bahamas)

The Privy Council held that a Liquidator could pursue a recipient of $13m as a preference outside of the jurisdiction, some 17 years after the company went into Liquidation.

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In the Matter of Halifax Investment Services Pty Ltd (in liquidation) (No 5) [2019] FCA 1341

The Federal Court of Australia considered that it could make a request to the New Zealand High Court that there be a joint hearing in respect of applications relating to the pooling of funds held by companies in liquidation in each of Australia and New Zealand.

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Thomas Cook enters Compulsory Liquidation 

Thomas Cook has entered Compulsory Liquidation and ceased trading with immediate effect, with all future flights and holidays being cancelled. More than 150,000 passengers required repatriation, with the UK government and the Civil Aviation Authority chartering planes to fly customers home. The 178 year old company had agreed a £900 million bailout but needed to secure an additional £200 million by November 2020 to ensure the bailout was secure. Thomas Cook had debts of £1.6 billion at the time of collapse, putting 21,000 jobs in 16 countries at risk.

Australia Reforms set to crack down on illegal phoenixing activity

New laws proposed in Australia’s Treasury Laws Amendment (Combatting Illegal Phoenixing) Bill 2019 are aimed at giving regulators additional enforcement and regulatory tools to enable them to detect and disrupt illegal phoenixing. They will also be able to prosecute and penalise those engaging in or facilitating illegal phoenixing. Currently, the illegal activity only incurs civil penalties and an order to compensate the company for any damage suffered. The laws are only targeted at dispositions of assets for less than the market value or less than the best price reasonably obtainable where these transactions prevent or hinder the company assets from being available to creditors in a winding up. There are no proposals to restrict legitimate restructuring activities. 

Debenhams defeats challenge to company voluntary arrangement

The legal challenge backed by Sports Direct against Debenhams’ company voluntary arrangement (CVA) plan has been rejected by the High Court on four out of five grounds. This has allowed the CVA to go ahead as planned. The judge criticised Sports Direct’s involvement in Combined Property Control Group’ s challenge and commented that it was ‘entirely plausible’ that Mike Ashley was seeking to buy the store at an ‘advantageous price’ or eliminate a competitor to House of Fraser, which he bought last year. The CVA is backed by over 90% of Debenham’s creditors and will result in the closure of up to 50 of its 166 stores whilst rent cuts have been agreed for other stores which will continue to trade.

For any more information on any issues related to these articles please contact Alan Bennet on a.bennett@ashfords.co.uk or David Pomeroy on d.pomeroy@ashfords.co.uk.

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