Yesterday in Canberra, a significant step forward for Australian insolvency law reform was taken: Parliament passed the much anticipated "safe harbor" for directors in relation to insolvent trading liability and moratorium on reliance by solvent counterparties on “ipso facto” clauses in voluntary administration and creditors schemes of arrangement.

Key Points

On the key points:

In a wide-reaching judgment concerning an appeal by Mighty River International in the administration of Mesa Minerals, the Western Australian Court of Appeal, has recognised that “holding” Deed of Company Arrangement (DOCA) is permissible under Part 5.3A of the Corporations Act.

The key points – Holding DOCAs as a flexible framework

The key points for insolvency and turnaround professionals to take from Mighty River International v Hughes are:

In a decision of importance for liquidators and litigation funders, the Western Australian Court of Appeal in Perrine v Carrello has further explained the important issue of how to determine the amount of compensation recoverable by liquidators where insolvent trading has occurred.

In a wide-reaching judgment concerning an appeal by Mighty River International in the administration of Mesa Minerals, the Western Australian Court of Appeal has recognised that a "holding" Deed of Company Arrangement (DOCA) is permissible under Part 5.3A of the Corporations Act.

The key points - Holding DOCAs as a flexible framework

The key points for insolvency and turnaround professionals to take from Mighty River International v. Hughes are:

On June 6, 2017, Australian-based mining equipment supplier Emeco Holdings emerged from chapter 15 proceedings in the Southern District of New York following an Australian court’s sanctioning of the company’s scheme of arrangement.

The scheme of arrangement was a component of an innovative, comprehensive restructuring that provided for a three-way merger of three large Australian mining service companies and a restructuring of A$680 million of debt through a debt-for-equity swap, rights offering, and full refinancing.

In December 2013, the Second Circuit Court of Appeals held as a matter of first impression in Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), 737 F.3d 238 (2d Cir. 2013), that section 109(a) of the Bankruptcy Code, which requires a debtor “under this title” to have a domicile, a place of business, or property in the U.S., applies in cases under chapter 15 of the Bankruptcy Code.

The insolvent trading "safe harbour" and "ipso facto" clause reform

The key points

Last week, the federal government circulated an exposure draft of the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill (the Bill). The Bill is intended to promote entrepreneurship and innovation among directors of companies facing insolvency - this is to be achieved through two fundamental changes to existing insolvency laws.

Piggybacking off the case study involving a UK-based company in crisis after an oil spill in Nigeria, panelists Ryan Eagle of Ferrier Hodgson, Marcelo Carpenter of Sergio Bermudes Law Office, David Kelleher of Fortress Investment Group (Australia) Pty Ltd., and Fidelis Oditach of South Square discussed the key decision-making factors of investing in a similarly-situated oil and gas company. Some of the key takeaways applicable to investing in oil and gas companies generally were:

Court of Appeal sets the record straight

The key point

On March 9, 2017, a full bench of the New South Wales Court of Appeal handed down a significant decision affecting approach to judicial review and approval of liquidator remuneration. Significantly, existing tension between decisions of different judges at first instance, and between NSW and Federal courts, has been resolved.

Court of Appeal sets the record straight

The key point 

Earlier today, a full bench of the New South Wales Court of Appeal handed down a significant decision affecting approach to judicial review and approval of liquidator remuneration. Significantly, existing tension between decisions of different judges at first instance, and between NSW and Federal courts, has been resolved.