With Hertz emerging from a bankruptcy with a positive result for shareholders, we are reminded of the interplay between the equity markets and the bankruptcy alternative.

Some firms facing financial challenges during the pandemic were able to avoid a bankruptcy filing altogether because of their ability to raise the necessary funds through an equity offering. Hertz provides an example of a situation where the bankruptcy filing instead of wiping out the equity enhanced value.

The Government has released a consultation paper as part of their commitment to ongoing reform of Australia’s corporate insolvency regime.  Phoenix activity refers to both legitimate business rescue activities and serial insolvency to avoid debts.