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Australian Court of Appeal Approves Use of "Holding" Deed of Company Arrangement

In Short

The Situation: Frequently, the statutory moratorium period provided to voluntary administrators to restructure an insolvent company is too short to find a solution. Administrators often utilise "holding" deeds of company arrangement to extend the period of moratorium and "buy" time to investigate potential restructuring opportunities for the future of the company. A creditor recently challenged this industrywide practice by arguing that holding DOCAs are invalid.

Australia, Company & Commercial, Insolvency & Restructuring, Litigation, Jones Day, Corporations Act 2001 (Australia)
Corporate and Business Rescue in Australia: Insolvency Law Reform Process Continues as Government Releases Proposals Paper

Background

On 7 December 2015, the Australian Government released its "National Innovation and Science Agenda" ("Agenda"). In the Agenda, the Government outlined its intention to make three significant reforms to Australia's insolvency laws, adopting the recommendations of the Productivity Commission ("Commission") in its report, "Business Set-Up, Transfer and Closure" ("Report"), released on the same day as the Agenda:

Australia, Company & Commercial, Insolvency & Restructuring, Litigation, Jones Day