Australia: The Arrium Series (#2) - Determining solvency where current debts are being paid but large debts are due in the relatively distant future

In brief

The Arrium Series

Welcome to issue #2 of our Arrium Series, where senior members of the Baker McKenzie team involved in the successful defence of proceedings against the former CFO, former Treasurer and other former employees of the Arrium Group, consider key issues arising in those and related insolvent trading proceedings and from the judgment handed down on 17 August 2021.1

A summary of the relevant background to the Arrium proceedings, some key terms and the key issues to be considered in this Arrium Series can be found in issue #1 here.


Contents

Today's issue - determining solvency where large debts due in distant future

As discussed in issue #1, it was alleged, in both the BoC Proceedings and in related insolvent trading proceedings2, that the Arrium Group as a whole was insolvent in January/February 2016 when various drawdown notices to the total value of approximately AUD 370 million were submitted and those loans advanced.

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1 Anchorage Capital Master Offshore Ltd v Sparkes (No 3); Bank of Communications Co Ltd v Sparkes (No 2) [2021] NSWSC 1025
2 which conditionally settled on day 34 of the trial

Related alerts from the Arrium Series

Australia: The Arrium proceedings - something important for everyone

Australia: The Arrium Series (#3) - Do you owe a lender a duty of care?

Australia: The Arrium Series (#4) - When may company officers and employees be personally responsible for representations?

Australia: The Arrium Series (#5) – Interpretation and application of Material Adverse Change clauses

Australia: The Arrium Series (#6) - Lender reliance and loss causation

Australia: The Arrium Series (#7) - Novel assessments of loss for negligence, misleading conduct and insolvent trading

Australia: The Arrium Series (#8) - Secondary debt trading - Assignments of debts and rights of recovery


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