A comprehensive review has begun into the effectiveness of Australia’s corporate insolvency laws in protecting and maximising value for the benefit of all interested parties and the economy. Undertaken by the Federal Government’s Parliamentary Joint Committee on Corporations and Financial Services, the review is seeking submissions by 30 November 2022.
Insolvency practitioners and creditors facing voidable transaction claims will need to reassess the value of any potential or threatened unfair preference claims or other voidable transaction claims, following two important insolvency decisions in the High Court yesterday (Metal Manufactures Pty Limited v Morton [2023] HCA 1 (Metal Manufactures); Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2 (Badenoch).
It held that:
A comprehensive review has begun into the effectiveness of Australia’s corporate insolvency laws in protecting and maximising value for the benefit of all interested parties and the economy. Undertaken by the Federal Government’s Parliamentary Joint Committee on Corporations and Financial Services, the review is seeking submissions by 30 November 2022.
Changes to Singapore's statutory regime for schemes of arrangement, which came into effect in May 2017, are aimed at placing Singapore on the map as an international debt restructuring hub.
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).
The Court will closely examine the relevant transactions involving the accounts and form a view – which may be an impressionistic one – as to the likely extent of the interest of each client (or each client group) in those accounts.
Agencies need to get ready for ipso facto reform by making changes to their contracts, funding agreements and contract administration practices.
Australian Government Agencies face constraints on their ability to terminate agreements where a contractor has entered into voluntary administration or certain other forms of insolvency procedure. The Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act, which amends the Corporations Act 2001 (Cth):
Judge Chapman’s judgment is obviously a welcome development for participants in the structured capital markets, particularly those who transact regularly with US counterparties.
Key Points:
You can lead a director to the safe harbour, but you can't make him drink.
The Government's new approach to insolvency is long on rhetoric about risk taking and the need to remove the stigma of business failure.
However, it is short on detailed consideration of exactly why we have legal rules for corporate and personal insolvency.
Those rules aim to balance the interests of creditors against the need to encourage business start-ups.