Directors are first and foremost responsible to the company as a whole and must exercise their powers and discharge their duties in good faith in the best interests of the company and for a proper purpose. The reference to "acting in the best interests of the company" has generally been interpreted to mean the collective financial interests of the shareholders.

The decision in the Go Energy Group is an important one for insolvency practitioners, who now have guidance on how to manage the conflicts that can arise when acting as liquidator to multiple companies within a corporate group.

Last Thursday's decision in the WA Supreme Court to allow a sale to insiders of a company subject to a deed of company arrangement will make the restructuring process smoother for administrators, who can now negotiate with a wider pool of potential purchasers, as Chapter 2E of the Corporations Act 2001 (Cth), which deals with related party transactions, will not apply (Mighty River International v Bryan Hughes and Daniel Bredenkamp as Deed Administrators of Mesa Minerals Ltd (Subject to Deed of Company Arrangement) [No 2] [2018] WASC 368; Clayton Utz acted for the deed administrators of Mes

Some 25 years after Harmer promised a faster, more efficient and commercial approach for dealing with failed and failing companies, Australia's highest court has this morning confirmed that creditors can contractually bind a company and all stakeholders to a moratorium extension via a properly formed holding DOCA (Mighty River International Limited v Hughes [2018] HCA 38; Clayton Utz acted for the successful Deed Administrators of Mesa Minerals Limited).

While much attention earlier this year was paid to the introduction of the safe harbour for directors, the second element in Australia's major reforms to insolvency laws ‒ the moratorium on the enforcement of ipso facto clauses (including self-executing clauses) ‒ is now in effect.

Section 37A can be used by future, contingent and prospective creditors to recover assets, meaning the transferor need not be indebted at the time of the transfer.

Recovering assets from a debtor is usually done via the recovery provisions in the Corporations Act 2001 (Cth) or theBankruptcy Act 1966 (Cth), but there is another option, at least in New South Wales, which offers creditors, insolvency practitioners and any prejudiced parties a useful alternative. A recent case demonstrates its advantages (Lardis v Lakis [2018] NSWCA 113; Clayton Utz acted for the successful creditor).

On 11 September 2017, major reforms to Australia's insolvency laws including an insolvent trading safe harbour and a restriction on the enforcement of ipso facto rights in certain circumstances passed through the Senate. These insolvency reforms amend relevant provisions of the Corporations Act.

The safe harbour provisions commenced on 19 September 2017.

Safe harbour and ipso facto clauses reforms are closer, with the consultation on the Insolvency Laws Amendment Bill 2017 having closed last week, but further work is needed.

The Federal Government's consultation on the safe harbour and ipso facto reforms in the draft Insolvency Laws Amendment Bill 2017 closed on 17 May 2017, so we now have a better idea of what they will look like.

Overseas developments might have inspired mooted changes to create a debtor in possession model in Australia.

2021 began with a sense of optimism, but COVID-19 is continuing to wreak havoc on the Australian economy. The Commonwealth Bank of Australia is forecasting a 0.7% decline GDP in the September quarter and a likely rise in unemployment in July. New South Wales in particular, is expected to be hit very hard.

The Australian Government has accepted certain recommendations of the Productivity Commission's long-awaited Report on Business Set-up, Transfer and Closure, in an attempt to change the focus of Australia's insolvency laws from "penalising and stigmatising business failure”, according to the Minister for Small Business and Assistant Treasurer, the Hon Kelly O'Dwyer MP.

It has expressed a willingness to legislate to introduce at least two main changes: