On 1 September 2020, the remaining provisions of the amendments to the Companies Act 1993, and Insolvency Practitioners Regulation Act 2019 (IPRA) will come into force. Some changes that creditors, directors, shareholders, and their advisors need to know about are:
Restriction on Shareholders or Board Appointing Liquidators
The 10-working day window for shareholders to appoint liquidators from service of winding up proceedings is gone.
Once a company has been served with Winding Up proceedings brought by a creditor, the company’s shareholder(s) or board will be unable to appoint liquidators unless they have the consent of the creditor who is pursuing the winding up proceeding.
For shareholders needing or wishing to appoint liquidators we encourage them to start the process as soon as they are concerned about insolvency, and at the latest following an unsatisfied statutory demand.
Introduction of Voidable Dispositions Regime
If a company disposes of property after the company is served with a winding up application but before it is placed into liquidation by the High Court and that property was disposed of other than:
(a) In the ordinary course of business (eg sales of inventory); or
(b) By an administrator, a deed administrator, or a receiver (who will need to be a LIP); or
(c) Under an order of the Court;
the Company’s liquidators will have the ability to set aside those dispositions as voidable. The procedure is broadly similar to the insolvent transactions regime.
Licensing of Insolvency Practitioners
Only Licensed Insolvency Practitioners (LIPs) will be able to accept insolvency appointments from 1 September 2020. Transition arrangements mean that current CAANZ/RITANZ Accredited Insolvency Practitioners (AIPs) can be treated as LIPs for the period up to 1 September and the AIP will be able to continue to accept appointments while their LIP application is decided.
Anyone who is not an AIP by 1 September 2020 and who does not become a LIP in the meantime, will be able to continue to act on their existing insolvency assignments until 31 August 2021. If the insolvency practitioner does not become a LIP by 31 August 2021, any insolvency assignments that have not been completed by this date will need to be taken over by a LIP.
McDonald Vague employs 5 current AIP’s with a further AIP as a consultant. We are well placed.
Related Party Voting at Creditors’ Meetings
If an administrator or liquidator considers that a related creditor is voting on a resolution, the related creditor’s vote must be disregarded unless the related creditor has given written notice to the administrator or liquidator that the creditor is a related creditor and that it intends to apply to the Court for an order that its vote be taken into account. The related creditor must make the application to the Court within 10 working days of [after] the creditors meeting in which the vote is held.