(Australia) Post Administration R&D Tax Offsets Deemed Personal Property in Account

Companies entering external administration often have outstanding tax filings. The external controllers appointed conduct initial and ongoing reviews as to those filings. Then, in time, they either bring the filings up to date or engage the tax office in order to revisit historical filings. Aside from being legally required to address a company’s filings, external controllers often focus on a company’s taxation affairs because there may be offsets or refunds due which can be realised as assets as part of the estate or in any transactions.

Depending on the corporate structure used and the rulings by the tax office, research and development (R&D) expenditure (among other expenses) can result in tax offsets and refunds post administration. Securing those refunds can sometimes result in priority disputes. In a unanimous decision[1] this week, the Court of Appeal has considered various issues relevant to R&D offsets and their treatment under the Personal Property Securities Act (Cth) (PPSA) and the Corporations Act (Cth) (Act) in a post administration context. 

We consider the treatment of Australian R&D refunds as part of insolvent estates under the Act and the PPSA in our latest insight.

[1] See Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as Liquidators of Spitfire Corporation Limited (In Liq) [2023] NSWCA 118 (Resilient).

(UK) Pensions – A Pot to Play for?

The recent case of Re Lloyds British Testing Ltd [2023] is a reminder not to forget that in the right circumstances a director’s occupational pension pot might be a valuable source of funds that an Insolvency Practitioner (IP) can access to recover an unpaid debt due from a former director.


In this case, an application was brought by Manolete Partners Plc seeking an order to compel the judgment debtor, a former director of Lloyds British Testing Ltd (the “company”) to draw down his pension to satisfy an outstanding judgment debt.

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(UK) What are the Key Takeaways for future Restructuring Plans following the GAS sanction hearing?

What can we say about the outcome of the GAS (Great Annual Savings Company Limited) sanction hearing that hasn’t already been reported?

It’s impossible not to comment on the fact that the plan was not sanctioned, and as a consequence of fierce opposition from HMRC that it avoided cram down.  Nor that the court refused to sanction the plan on the basis that the conditions for cram down were not met – the court was not satisfied that HMRC would be better off under the plan and even if it were the judge said he would have not exercised his discretion to cram down.

Our previous blog sets out the detail about the arguments made by HMRC in opposition to the plan.  In this blog we look at some of those arguments and the key takeaways for future plans.

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What is Meant by the language to “Consider” in the Insolvency Legislation ?

question mark on a sticky note against grained wood

The recent case of Dolfin Asset Services Ltd v Stephens & Anor (Re Dolfin Financal (UK) Ltd) [2023] EWHC 123 (Ch) (“Dolfin“) concerned a special administration, but it has relevance to administrators more generally.  In particular, when it comes to the judge’s view of what is meant by the word “consider” – which is phrase used in the insolvency legislation when it comes to making decisions.

The insolvency legislation often requires an administrator to make a decision based on what they “think” or “consider”, putting the onus on the officeholder. For example:

  1. an administrator must perform his functions with the objective of rescuing the company as a going concern unless he “thinks” it impracticable; and
  2. an administrator shall make an application to end an administration if he “thinks” the purpose cannot be achieved.

This is of course purely subjective and what one officeholder “thinks” or “considers” may well be different to what another officeholder would “think” or “consider” faced with the same question. So, how does an office holder know if they are making the right decision?

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(UK) Avanti: The Evolution of a Spectrum – from Fixed to Floating Charge, who Needs Control?

In a decision likely to be welcomed by both debtors and lenders, the High Court has held that a charge granted by Avanti Communications Limited (“Avanti”) was properly characterised as a fixed charge (rather than a floating charge) notwithstanding that the chargor retained an element of control over the charged assets. A key plank of the decision was that the relevant assets were not ‘fluctuating assets’ or ‘stock in trade’ that the chargor might be expected to dispose of in the ordinary course of its business.

This is the first major case examining the nature of fixed and floating security since the House of Lords’ decision in Re Spectrum Plus (“Spectrum”) in 2005, which recharacterised a purported fixed charge over book debts as a floating charge as the chargor was free to use the secured assets and therefore the lender lacked the requisite control required for a fixed charge to attach to the assets. Common practice following Spectrum has been the assumption that anything less than total control of a charged asset by the lender will result in classification of the charge as a floating charge. The Court’s decision in Avanti moves away from this towards a more nuanced approach.

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Latest Market Guidance on the National Security and Investment Act 2021 (“NSIA”) is not particularly comforting to UK restructuring professionals

Wooden singpost with "help, support, advice, guidance" arrows against blue sky.

The NSIA is aimed at safeguarding national security and only applies to certain transactions occurring within certain sectors where national security might be threatened.  There are 17 sectors in total, including energy, transport, and communications.  

Depending on the transaction, the NSIA may require a purchaser to notify the Secretary of State of an acquisition to obtain clearance – this is mandatory if the transaction falls under the scope of the NSIA.  In some cases, notification can be voluntary, and in certain circumstances, the Secretary of State can “call-in” a transaction for scrutiny.

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(UK) The Gloves are off for HMRC: What did we learn from the Great Annual Savings Sanction Hearing?

Yesterday saw the end of a three-day sanction hearing for the restructuring plan (the “Plan”) of the Great Annual Savings (GAS) company, with Justice Adam Johnson reserving his judgment and importantly, his decision on whether to exercise cross-class-cram-down to sanction the Plan for a later date.

As we discussed in our recent blog, the Plan has generated widespread interest, with HMRC actively opposing the sanction of the Plan on a number of grounds. After facing the fate of cram-down in Houst, HMRC made the decision to argue their case in court this time round and in the words of their Counsel: are no longer shouting from the side lines and are on the pitch, actively resisting the Plan.

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MOAC Mall Holdings LLC v. Transform Holdco LLC – The US Supreme Court Unanimously Rules That Section 363(m) Is Not Jurisdictional

On April 19, 2023 the Supreme Court issued its unanimous ruling in MOAC Mall Holdings LLC v. Transform Holdco LLC, 528 U.S ____ (2023), holding that the limitations contained in section 363(m) of the United States Bankruptcy Code are not jurisdictional.  The Supreme Court’s ruling not only resolved a split amongst the circuits, but it also cleared up a foggy corner of arguably one of the most consequential sections of the Bankruptcy Code. 

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“It’s the principle of the thing”: HMRC fights back against UK Restructuring Plans

‘If, at first, you don’t succeed, then try and try again’ is a fitting description for HMRC’s recent approach to restructuring plans, with its opposition of plans proposed by The Great Annual Savings Company (GAS) and Nasmyth Group Limited (Naysmyth).

The GAS sanction hearing (which is due to take place this week) will be the first time that HMRC has taken an active role contesting a restructuring plan at sanction following the case of Houst where the Court exercised its discretionary power to “cram down” HMRC. 

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What is in your Derivatives?

Recent market shocks (from the 2022 mini budget which triggered a pension fund crisis to more recent developments with respect to Credit Suisse, Silicon Valley Bank and Signature Bank) will prompt market participants to review their hedging arrangements. There are several matters to take into account when market participants start to experience distress, and in particular, their hedging counterparties will likely start to consider the position under outstanding OTC derivatives transactions, and the terms of their ISDA Master Agreement (“ISDA”) (as well as any related collateral/ financial arrangements).

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