In July 2017, we wrote about the case of Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed)[1], in which the Western Australian Supreme Court held that rights of set off enjoyed by an insolvent company’s contractual counterparties would not apply if the company had granted a security interest over the relevant contractual rights under the Personal Property Securities Act 2009 (PPSA).

The decision has been overturned by the Court of Appeal of the Supreme Court of Western Australia[2], such that the existence of a security interest will not necessarily of itself preclude the operation of statutory or contractual set off rights in favour of third parties.

The decision is significant because it potentially has a dramatic impact on the competing rights of secured and unsecured creditors in liquidation, and may prevent secured creditors from enjoying a windfall at the expense of unsecured creditors. It also places the emphasis firmly on the terms of the relevant security interest and underlying contract, which will now need to be considered in detail each time there is a claim for set off by the insolvent company’s contractual counterparties.

[1]               [2017] WASC (2 June 2017)

[2]               Hamersley Iron Pty Ltd v Forge Power Group Pty Ltd (in liquidation) (receivers and managers appointed) [2018] WASC 163


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On 8 February 2018, the Hong Kong Court of First Instance (the “Hong Kong Court“) ruled in Re Supreme Tycoon Limited [2018] HKCFI 277 that the common law power to recognise and assist foreign insolvency proceedings extends to voluntary liquidations. This is the first authority on this issue in Hong Kong.
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In our previous blog post, we examined the decision of the New South Wales Court of Appeal to uphold the composition of classes of creditors in the Boart Longyear restructuring by way of scheme of arrangement.

Following an extensive second court hearing to approve the schemes of arrangement (which involved multiple days of hearings, several adjournments, and a court-ordered mediation), amended versions of the Boart Longyear schemes have now been approved by the Australian courts.

The decision emphasises the importance of the court’s overall “fairness” discretion in approving a scheme, irrespective of whether classes of creditors have been properly constituted. Importantly, differential treatment within a class of creditors that may not be sufficient to justify the creation of a separate class may nonetheless create sufficient unfairness to cause the scheme to ultimately fail. Significantly, the court was clear in its final judgment that the schemes as initially drafted would not have passed the “fairness” test and would have been rejected.


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Hogan Lovells business restructuring and insolvency practice partners Ron Silverman, Robin Keller, and Shaun Langhorne recently joined Debtwire senior legal content specialist Richard Goldman to discuss some “game-changing” revisions to Singapore’s insolvency regime. During the discussion, the panel addresses how Singapore, in an effort to market itself as an international forum for debt restructurings, transformed

In the recent case of Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed)[1], the Western Australian Supreme Court has confirmed that the grant of a security interest under the Personal Property Securities Act 2009 (PPSA) by a company to a third party will likely render any rights of set-off enjoyed by the company’s contractual counterparties worthless where the company subsequently enters liquidation.

The PPSA is a relatively new legislative regime in Australia, and applies to a wide range of “in substance” security interests over most types of property other than land. The decision is significant, because it represents the first time an Australian Court has conducted a detailed analysis as to the interplay between security interests granted under the PPSA and statutory rights of set-off applicable in insolvency.

[1] [2017] WASC (2 June 2017)


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