Key Points

A recent decision of the NSW Supreme Court examines whether a 'hopelessly insolvent' subcontractor that executes a holding DOCA to enforce payment claims served on head contractor under the NSW security of payment legislation.

Key takeouts

This week's issue has a strong ESG focus. We cover the Senate Committee's report into the government's Bill to overhaul the existing 'safeguard' mechanism, the outcomes of the ACCC's greenwashing sweep and the ACCC's enforcement priorities for 2023/24. On the financial services front we provide an update on the status of the proposed FAR (which would expand on and replace the existing BEAR). We also provide an update on the progress of measures to further 'modernise' Corporations Act requirements and more…

Liquidators and creditors should be aware of the High Court's analysis of the limits of set-off under s 553C of the Corporations Act 2001 (Cth).

What steps should directors take when dealing with challenges to their company's solvency? We provide a high-level guide to the legal framework, looking at directors' general duties in an insolvency context and how the safe harbour defence to insolvent trading applies.

What suggests a company may be financially distressed? What are directors' legal obligations? At what point should they seek advice?

Our guide explains the law, to help directors understand what they need to do.

Directors' general duties in an insolvency context

Key Points

Key Points

Hong Kong Airlines (HKA) has announced that it is seeking to implement a restructuring of its aircraft lease obligations and other liabilities by court action in the UK and Hong Kong.

The plan proposes to give aircraft lessors a right to an upfront cash recovery — of about 5 percent of their claims (or in the case of lessors of aircraft being retained, the right to elect equity in the restructured HKA) — and potential future payouts starting in 2028 tied to the future earnings of the airline.

Key Point

• The UK government's proposals to only partially implement a new UNCITRAL Model Law means that creditors of English law debts who do not consent to a foreign restructuring proceeding will still have recourse to enforcing their rights against the debtor's UK-based assets.

English Law Is Still a Special Situation

Elon Musk recently said he has a "super bad feeling" about the economy, pithily declaring what most financial commentators have been predicting in more technical terms.

Key Points

• The use by Malaysia Airlines' subsidiary, MAB Leasing Ltd. (incorporated in Malaysia) ("MABL"), in 2021, of an English Scheme of Arrangement (a "Scheme") to compromise its aircraft lease obligations proved that US Chapter 11 is not the only route to a globally recognised compromise of airline leases.
• Airline lessors should now prepare themselves for Schemes (and possibly also other English restructuring processes) as an alternative to Chapter 11.

Background