The UK's latest quarterly company insolvency statistics, published on 29 October, suggest that the unexpectedly calm seas seen over the last 18 months (and maintained by unprecedented government economic support) may be starting to give way to stormier waters as corporate insolvencies begin to return to pre-pandemic levels.
The court’s power to overturn the decisions of insolvency practitioners in a company’s external administration was highlighted in the recent case of Tuscan Capital Partners Pty Ltd v Trading Australia Pty Ltd (in liq), in the matter of Trading Australia Pty Ltd (in liq) (Proof of Debt) [2021] FCA 1061 (Tuscan).
In Australia, s 436A of the Corporations Act 2001 (Cth) (Act) provides for the circumstances in which a company may appoint a voluntary administrator. This provision requires the company’s board to resolve that: (a) in the opinion of the directors voting for the resolution, the company is insolvent, or is likely to become insolvent at some future time; and (b) an administrator of the company should be appointed.
Voluntary administration is Australia’s primary business rescue regime. This article is Part 2 of a two-part series. In this article, we highlight the impact of voluntary administration on various stakeholders and the potential outcomes for a company in voluntary administration. It is not intended to be used as an exhaustive guide to Australia’s voluntary administration regime and its many nuances.
Voluntary administration is Australia’s primary business rescue regime. This article is Part 1 of a two-part series. This article provides an introductory overview of voluntary administration in Australia, explaining what it is, why entities might enter it and its processes. It is not intended to be used as an exhaustive guide to Australia’s voluntary administration regime and its many nuances.
In Australia, public companies are required to have at least three directors (s 201A(2) of the Corporations Act 2001 (Cth) (Act)). However, in exceptional circumstances, a public company might find itself with fewer than three directors – for example, where the other board directors resign because of some disagreement.
The peak indebtedness rule employed by liquidators to maximise recovery of unfair preference claims is abolished
On 30 April 2021, reforms to the UK’s regime governing sales in administration by way of a ‘pre-pack’ to a connected party purchaser came into force.
The centrepiece of the reforms is a new requirement for a connected party purchaser to obtain an opinion from an independent ‘evaluator’ on whether the terms of the sale are reasonable.
While the reforms add additional process points that must be navigated in relevant cases, they will bring improved transparency to an important rescue tool which has, at times, attracted warranted criticism.