The Federal Court of Australia has recently issued a decision clarifying the breadth of its powers under the Cross-Border Insolvency Act 2008 (Cth) (the Act).
In this case, Coin Co International PLC operated two businesses: a cash services business in the UK, and a global currency exchange business. As part of its currency exchange business, it had branch offices in Ireland, Canada and Australia. On 27 November 2014, the High Court of Justice of England and Wales appointed administrators to Coin Co.
The administrators decided to wind up the Australian operations, and believed it was in the creditors' best interests if the Australian assets were sold locally by insolvency practitioners based in Australia. The Federal Court took no real issue with this and, on application of the English administrators, recognised the English administration as a 'foreign main proceeding' under the Act and appointed Australian agents to be entrusted with the distribution of all of Coin Co's assets in Australia.
Controversially, the administrators also sought a declaration that Coin Co's administration in Australia commenced on 27 November 2014 or, alternatively, on the day on which the Australian court ordered recognition of the English administration. This was sought to provide clarity of the 'relation back day' date on which the winding up will be deemed to have commenced under s513C of theCorporations Act 2001 (Cth). Two creditors opposed this declaration.
The court held that s17(1)(b) of the Act empowered the Australian agents to initiate actions under the Corporations Act, including actions unwinding voidable transactions. The court would need to determine the relation back day, or when the administration commenced, if those actions were brought. Neither the administrators nor the Australian agents had yet commenced such actions. If and when they did, the parties against whom actions are brought would have an interest in the determination of when the relation back day is.
The court further held that the Act did not authorise the court to make the declaration sought in respect of the relation back day at that stage as it would pre-empt proper consideration of a question which affects the rights of parties who had not had any opportunity to be heard.
The full decision in Wild (Foreign Representative) v Coin Co International PLC (Administrators Appointed); In the Matter of Coin Co International PLC (Administrators Appointed)  FCA 354 is available.