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The latest issue of the Insolvency Law Journal (Volume 30 Part 2) contains the following material:

EDITORIAL – Editor: Dr David Morrison

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Articles

A Social Psychology Perspective of Fraudulent Reporting at WorldCom: Pressures, Incentives and Involvement of the CEO and CFO – Dr Kazi Saidul Islam

History gives testimony that fraudulent financial reporting is a recurring phenomenon. As the circumstances from firm to firm differ, case studies are useful to examine what contributes to fraudulent financial reporting in individual firms. For this reason, this research is undertaken as a case study to examine the salient factors of fraudulent financial reporting at WorldCom that collapsed in 2002. The study finds that the CEO and CFO of WorldCom participated in producing fraudulent financial reports under diverse individual, institutional and exogenous circumstances. As they were influential in materially misstating financial reports and espoused attitudes and arguments supporting their actions, this study uses a social-psychology framework called “fraud triangle” to explain the pressures, incentives, interactions, influences and behaviours of the company’s CEO and CFO. The study suggests that future researchers undertake case studies and use this theory for examining the interactive factors of fraud.

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Is Appointing Court Leave Required to Sue a Court-Appointed Liquidator? – Dr John Azzi

In November 2020, the NSW Court of Appeal dismissed an appeal seeking to overturn a decision refusing the applicants leave to commence proceedings against a court-appointed liquidator (Aardwolf Industries LLC v Tayeh). And despite the parties commonly agreeing leave was required, Leeming JA nevertheless questioned whether this was in fact correct, making in obiter remarks “lest they be overlooked in later cases”. Given the preceding and noting an article published in 2011 suggesting it is “plainly wrong” for intermediate courts to insist on appointing court leave before a person with standing (albeit not a “person aggrieved”) can pursue proceedings against a liquidator, this article finds the widely applied prerequisite of appointing court leave is a non-concurrent state law that is not picked up by either s 79 or s 80 of the Judiciary Act 1903 (Cth). As will appear, it is inconsistent with s 599 of the Corporations Act 2001 (Cth), diminishing the right of a person aggrieved by the conduct of a liquidator to commence proceedings against them and stultifying exercise of federal judicial power.

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RECENT DEVELOPMENTS – Editor: Dr David Morrison

  • Judicial Discretion in the Grant of Relief in Recognition Applications under the Model Law – Kwan Kiat Sim

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NEW ZEALAND REPORT – Editor: Professor Lynne Taylor

  • Examination and Production Orders under the Corporations Act 2001 (Cth) and the Companies Act 1993 (NZ): A Trans-Tasman Comparison – Lynne Taylor

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BOOK REVIEW

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For the PDF version of the table of contents, click here: Westlaw AU – Insolv LJ Vol 30 No 2 Contents, New Westlaw Australia – Insolv LJ Vol 30 No 2 Contents or here: Checkpoint – Insolv LJ Vol 30 No 2 Contents.

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