There remain a number of issues in the proposed insolvency reforms that need careful deliberation, particularly where the Regulations have yet to be released for consideration.

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.

Debtor in possession financing in the US has continued to rise, particularly in the context of retail insolvencies. In Australia, we have seen a number of high profile retail collapses in recent years. Can DIP financing solve the woes of struggling retailers in Australia?

The Boart Longyear decisions confirm that class constitution remains a critical issue for review when pursuing creditors' schemes of arrangement.

The New South Wales Court of Appeal has recently confirmed the circumstances in which companies seeking approval of schemes of arrangement will be required to convene separate meetings for different classes of creditors.

Class constitution: key principles

Key Points:

While shareholders may only need to establish indirect market causation, there are still significant obstacles for establishing shareholder claims.

Do plaintiffs in a shareholder class action have to show they relied upon misleading or deceptive conduct, or is it enough that the market in general relied upon them, which then affected the share price?

Key Points:

Principals or contractors dealing with insolvent downstream companies should ensure they can properly substantiate any counterclaims.

Usually a principal is not entitled to rely on a set-off or counterclaim to resist court proceedings to recover a debt under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOP Act). However because of the operation of section 553C of the Corporations Act, the situation is different if the claimant is in liquidation.

Insolvent subcontractor’s claim

The NSW Government has accepted some of the key recommendations of the Recommendations of the Independent Inquiry in Construction Industry Insolvency in NSW, including the introduction of bonds. We know that the Government will:

The statutory exemption can be refreshed each time a person signs a new contract, even if he/she continues to hold the same position.

Receivers of a failed company have been unable to convince the Federal Court that statutory restrictions on termination payments reduced the payout entitlement of a senior executive (White v Norman; In the Matter of Forest Enterprises Australia Limited (Receivers and Managers Appointed) (in Administration) [2012] FCA 33).

Background

The Full Court of the Federal Court of Australia has become the first appellate court among ratifying countries to look directly at the meaning of “give possession” and “giving possession of the aircraft object to the creditor” under the Protocol to the Convention on International Interests in Mobile Equipment (known as the Cape Town Convention) on matters specific to Aircraft Equipment (the Protocol) in the context of an insolvency (the Virgin Australia insolvency) in Wells Fargo Trust Company, National Association (trustee) v VB Leaseco Pty Ltd (admin

The Senate Legal and Constitutional Affairs Legislation Committee has endorsed the passing of the Bankruptcy Amendment (Enterprise Incentives) Bill 2017 in its report dated 21 March 2018.

The Bill will align the bankruptcy period in Australia with the United Kingdom. Under the Bankruptcy Act 1996, the period of bankruptcy (unless a successful objection is made) is three years. If passed, the Bill will reduce the period to one year.

Key points to note are that: