Lawyers Positive on Insolvency Law Shake-Up

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Sweeping reforms to insolvency laws and regulations are set to benefit distressed companies that are attempting to negotiate a sale and avert going into administration, The Australian Financial Review reported. Local lawyers are of the view that draft regulations released this week by Minister for Revenue and Financial Services Kelly O'Dwyer are largely positive for lenders, struggling companies and the restructuring industry. "These reforms are the most significant since the Harmer reforms in the early 1990s," said King & Wood Mallesons head of restructuring and insolvency Tim Klineberg. "They are expected to change the negotiating dynamics as Australian companies approach distress, and in restructuring." The regulations are coupled with amendments to the Corporations Act which provide a "safe harbour" carve-out for a director's personal liability for insolvent trading. The amendments also cover so called "ipso facto" suspension and termination provisions in contracts. Read more.