Major restructuring destinations each provide distinct mechanisms for rehabilitating companies in distress. Our table sets out the similarities and differences in the processes available in Australia, England & Wales, Hong Kong, Singapore, and the USA.

Object of schemes of arrangement

This table provides a high level overview of the restructuring and insolvency processes available in Australia, comparing their purposes, effects, advantages and disadvantages.

Australia has a moratorium on the reliance upon ipso facto on insolvency (insolvency termination clauses in contracts which allow counter parties to terminate due to the fact of insolvency). It is complex and there are numerous carve-outs as outlined in the chapter.

"Ipso facto" clauses

Objective

In the context of an insolvent or near insolvent company, a receiver will be appointed, in the ordinary course, by a secured creditor seeking to have the assets which are the subject of its security realised to enable the payment of its claim. The appointment, most often, will be made under the agreement by which the security is granted or might be made under one of the property law statutes which authorise the appointment of a receiver by the court for the purpose of enforcing a security.

Object

Liquidation involves the collection of the company's assets, the realisation of those assets and the distribution of the proceeds of their sale to the company's creditors.

Process of appointing liquidator

Introduction

Informal workout agreements can renegotiate, delay, reduce or waive pre-existing debts owed by a company. For the debtor company, the main purpose of entering into an informal workout is to obtain agreements from its creditors to relinquish rights and refrain from enforcing certain debt covenants. The following are some commonly used informal workout mechanisms:

The Supreme Court of the United Kingdom (“SC”) has recently handed down a decision in the case of BTI v Sequana, dealing with the powers and duties of company directors. The appeal was expected to be of considerable importance.

This alert is especially relevant to companies, and directors of companies, in financial distress, as well as creditors and insolvency practitioners.

Key Takeaways

Este mes apenas se han publicado resoluciones que consideremos reseñables, sólo tres de tres audiencias provinciales nos han parecido dignas de atención. A cambios las tres hacen pronunciamentos muy interesantes.

Audiencias Provinciales

Compensación de pagos entre un hotel y su operador por derivarse de una misma relación contractual.

The Supreme Court's judgment in BTI v Sequana is long-awaited, and welcome. The court has confirmed that directors do have a common law creditors' duty, and that it works on a sliding scale basis.