By Georgina King, a Senior Associate of Matthews Folbigg in our Insolvency, Restructuring and Debt Recovery Group
In a recent case the Federal Court of Australia granted recognition to a US bankruptcy proceeding for the purpose of administration and realisation of assets located in Australia.
The application for recognition was made under the Cross Border Insolvency Act 2008 (Cth) (Act) pursuant to which the UNCITRAL Model Law on Cross-Border Insolvency is in force in Australia.
To obtain recognition under the Act and Model Law a foreign insolvency proceeding must be either a foreign main or foreign non-main proceeding. A foreign proceeding will fall within one of these categories if the insolvent debtor’s centre of main interests, or any place of operations where the debtor carries out a non-transitory economic activity with human means and goods or services, is located within the State where the foreign insolvency proceeding is taking place.
In the recent case of Weinstein (Trustee) v Morris [2016] FCA 993 the Court appeared to accept, although made no express finding, that the proceeding constituted a foreign main proceeding because of a range of factors including the debtor’s place of residence, two properties, bank accounts, secured creditors and majority of unsecured creditors being in the United States.
The application had been made to enable the foreign trustee to administer and deal with proceeds in the amount of $459,130.62 held in an Australian bank account following sale of an Australian property owned by the foreign bankrupt. The orders made by the Court in granting the application included that the funds be transferred to the foreign trustee for the trustee’s possession and control and that the administration, realisation and distribution of the foreign debtor’s assets in Australia be entrusted to the foreign trustee.
The author of this article has experience in advising and acting in applications for recognition of foreign insolvency proceedings by Australian courts.
Read the judgment here: http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2016/993.html?stem=0&synonyms=0&query=title(weinstein%20and%20morris%20)(link is external)
If you would like more information or advice in relation to insolvency, restructuring or debt recovery law, contact Georgina King on (02) 9806 7485 or georginak@matthewsfolbigg.com.au, or a Principal of the Matthews Folbigg Insolvency, Restructuring & Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au.
