Review: Insolvent Investments

Insolvent Investments, Stewart J Maiden eds., LexisNexis Butterworth, 2015, Chatswood, Australia

This is not a read for the lighthearted. But, Insolvent Investments is a fantastic specialist textbook examining the system of managed investments schemes and their related vehicles. Insolvent investments are a complex and increasingly frequent part of litigation having particularly emerged over the last 15 years. These schemes and the sheer complexity of them takes up an inordinate amount of court time and judicial contemplation.

Managed investment schemes are governed primarily by 5C of the Corporations Act but the judiciary has often been called in to fill the gaps. Specifically, the courts have had to create jurisprudence on how to wind up managed investment schemes and define the duty of officers operating pursuant to such schemes, ultimately defining their obligations as arising primarily under the act and not in a strict fiduciary role.

Insolvent Investments covers everything from directors duties to the rights of third parties and the role of creditors verses the pecking order for allocation of assets following dissolution.

Insolvency and bankruptcy are key areas of legal practise that tangentially permeate so many different areas of law that every practitioner should at least have a fundamental understanding of to allow them offer their clients a full view of their obligations and options.

At the end of the day, if this is not your specialist area of practise, then you will need to consult a specialist. However, to consult that expert on a somewhat level pegging, this book certainly does take you a long way to getting there and will empower you to engage that practitioner from a level of informed knowledge, with all the power of an in-depth exploration drawing from the finest legal, academic and judicial minds dedicated to exploring this specific area of law.

This review has been written for the ACT Law Society who provided the writer with the book.
Tom Barrington-Smith is currently completing his Australian Restructuring, Insolvency &  Turnaround Association advanced certification to supplement his legal qualifications towards certification as a specialist insolvency practitioner.

Bankrupts: Top 3 ACT Suburbs

The Australian Financial Security Authority (AFSA) have released national bankruptcy data for only the third time and the results are mildly interesting.

Adjusted per capita, the naughtiest debtors in Australia live in Newcastle West (NSW) with 1 in 75 people being declared bankrupt, Ilfracombe in outback Qld in second with 1 in 80 people and then Bumberrah and Johnsonville (VIC) bringing up third with 1 in 94 people.

For the ACT, there was one debtor per 733 adults in ACT in 2013–14, compared with 546 adults in Australia. This is below the national average and actually represents a slight dip for the ACT when adjusted for an increase in population over the last 4 years.

The most violent trend is the number of Territorians entering into (Part IX) Debt Agreements which has been increasing rapidly with almost double as many debtors compared to 2010 levels (190 vs 100).

ACT

Top 3 postcodes with the highest proportion of debtors:

2914 – Gungahlin – 28 bankrupts equalling 1 in 332 people

2606 – Woden – 17 bankrupts equalling 1 in 391 people

2913 – Gungahlin – 45 bankrupts equalling 1 in 412 people

Top 3 postcodes in relation to highest number of bankrupts:

2615 – Belconnen – 54 bankrupts equalling 1 in 608 people

2913 – Gungahlin – 45 bankrupts equalling 1 in 412 people

2905 – Tuggeranong – 39 bankrupts equalling 1 in 550 people

ACT Bankruptcy Report 2013-2014

Queensland Rugby moves to Wind-Up Brisbane Roar [updated]

In definitive proof that Rugby is the game for Lawyers, Queensland Rugby Union (QRU) have moved to have the A-League’s Brisbane Roar placed into Liquidation.

QRU has obtained the consent of a liquidator and the matter will be heard on the 19 August unless full payment is received by that date, from the Indonesian owners, the Bakrie Group. To reach the point of a winding-up Creditor’s Petition usually means that a Statutory Demand has gone unpaid. Once the 21 day period for the Statutory Demand lapses there is a presumption of insolvency which the Brisbane Roar must displace at the very least to avoid insolvency and liquidation.

The Roar apparently owes 12 months of rent over its use of Ballymore Stadium. This is on top of allegations of financial distress over unpaid dues to players and officials, and the financial plunge handed to them of late (latte?) by the dropping of major sponsor the Coffee Club.

Given the success of the Roar, now is probably a prime time for some ailing mining giant to step in, assume the debts and take the Bakrie Group up on their months long effort to offload the twice-champions.

[update] The winding up application has been dismissed after a settlement was apparently reached between the parties. The settlement is confidential but the inside word is that the Brisbane Roar’s financial woes are far from over with players and staff still awaiting payment.