On 5 October 2011 Justice Barrett of the Supreme Court of NSW handed down a decision in Centro Retail Limited and Centro MCS Manager Limited in its capacity as Responsible Entity of the Centro Retail Trust [2011] NSWSC 1175 (“Centro”) where he found that the responsible entity of Centro Retail Trust would be justified in modifying the constitution of the trust without unitholder approval to a insert a provision permitting the issue of units at a price different to that provided for by the pre-existing provisions.

After last year’s significant reforms to Australia’s insolvency framework, the Government has demonstrated a further commitment to simplifying and streamlining insolvency law to allow viable businesses that encounter economic challenges to restructure and continue trading.

This commitment is demonstrated by the Government continuing to examine ways to improve Australia's insolvency laws, including consulting on options to:

A paradigm shift is underway in Australian corporate restructuring.

Bold reforms are already in force which have changed the landscape for companies, their directors, creditors and other stakeholders.

From 1 July 2018, termination and other rights against companies in administration and other restructuring-related procedures will be unenforceable under the ipso facto reform.

Regulations are expected to have significant effect on the scope of the stay – these regulations are yet to be published.

On 11 December 2014, Justice Croft of the Victorian Supreme Court delivered judgment approving the settlement of multiple class actions brought by investors in managed investment schemes operated by an entity of the agribusiness Great Southern Group in 2005 and 2006.

Amaca Pty Ltd v McGrath & Anor as liquidators of HIH Underwriting and Insurance (Australia) Pty Ltd [2011] NSWSC 90

Result

In a recent Federal Court case in Australia (Global Tradewaves Ltd ("GTL") [2013] FCA 1127), liquidators appointed by the British Virgin Islands (BVI) court to GTL, successfully obtained leave to examine a former director of GTL in relation to the company's affairs and to compel him to produce certain company records.

UNCITRAL Model Law on Cross-Border Insolvency

The challenges faced by the construction industry are continuing to grow and insiders wonder when the storm is going to hit. For some, like Probuild, it already has. Rising inflation and the increasing cost of debt, labour shortages, supply chain delays and escalating cost of freight and materials are putting the industry under enormous pressure. Simultaneously Governments have invested heavily in building and construction to maintain growth in the economy.

In the case of Anchorage Capital Master Offshore Ltd v Sparkes (No 3); Bank of Communications Co Ltd v Sparkes (No 2) [2021] NSWSC 1025 (Anchorage v Sparkes), the Supreme Court of NSW considered the obligations of company officers to sophisticated commercial lending entities, and whether company officers could be personally liable for making misleading statements.

Significance

With the impact of COVID-19 rapidly being felt by businesses, 2020 is likely to see a number of Australian insureds face insolvency. While this presents a number of challenges for (re)insurers in the Australian market, there are steps that (re)insurers can take to manage the situation and their exposures.

The COVID-19 pandemic has placed immense strain across the whole of the economy and raises the issue of how company directors should balance their obligations to shareholders and creditors while ensuring that they protect themselves from any personal liability.

Companies and their directors in the following sectors of the economy face difficult decisions: