By Bonnie McMahon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group
The Federal Court has recently considered the effect of special proxies in a judgment which is important for those considering how special proxies operate, both in corporate and in personal insolvency. The decision also disallowed retrospective approval of remuneration in bankruptcy, making only prospective fee approval available for trustees.
On 16 December 2015, a bankruptcy trustee held a creditor’s meeting (“the Creditor’s Meeting”), with the main purpose of considering and passing a resolution approving his remuneration. At this meeting the Trustee’s remuneration was approved, on the basis of certain special proxies in favour of the chairperson and minutes secretary.
In Fewin Pty Ltd v Prentice  FCA 1239 (“Fewin”), one of the creditors of the Bankrupt’s estate challenged the procedure undertaken by the Trustee at the Creditor’s Meeting and the validity of the approval of his remuneration.
The Federal Court found that the Trustee’s remuneration was not validly approved at the meeting for a number of reasons, mainly relating to the procedure followed at the creditor’s meeting.