Welcome to the 2024 edition of "From Red to Black", our annual review of significant developments and topical issues in the Australian restructuring and insolvency market.
Regulator intervention and government stimulus packages in response to market shocks often mask underlying systemic distress and disrupt economic cycles. With companies now largely weaned off COVID-19 support packages, insolvencies have significantly increased.
By following certain steps and focusing on relevant courses of action, directors of startups can leverage the Safe Harbour provisions to increase their chances of navigating financial difficulties and achieving a better outcome for their company.
The Alita matter serves as a good illustration that if you intend to seek leave under section 444GA(1)(b) you should act swiftly and with regard to the potential regulatory risk.
With the mass of reports, reviews and consultations that have already occurred, there is no lack of critiques, complaints and proposed solutions. The risk is that these will (once again) be cherrypicked for fixes, rather than form the basis for a comprehensive review.
It has been 33 years since the "recession we had to have" in 1991. Fears that Australia would enter a technical recession during 2023 didn’t eventuate.
Case: Darty Holdings SAS v Geoffrey Carton-Kelly (as additional liquidator of CGL Realisations Limited) [2023] EWCA Civ 1135
Despites its recent failure in case against an administrator in a phoenixing case, ASIC could snatch long-term victory from the jaws of defeat with clear regulatory guidance for insolvency practitioners.
On 14 September 2023, the Australian Securities and Investments Commission (ASIC) released Consultation Paper 372 "Guidance on insolvent trading safe harbour provisions: Update to RG 217".
In contrast to a case under Chapter 11 of the Bankruptcy Code, which centralizes a company’s debt adjustment efforts in the U.S. and provides for expansive oversight and supervision by a U.S. court, a Chapter 15 recognition proceeding is an ancillary proceeding in which the U.S. court acknowledges the foreign proceeding and gives it effect under applicable U.S. law.
The Delaware Court of Chancery’s recent opinion in Cygnus Opportunity Fund LLC et al. v. Washington Prime Group LLC et al. presents a veritable grab bag of potential blog posts, from a suggestion that an officer of an Limited Liability Company could be contractually bound by an LLC Agreement he never signed to the interesting interplay (and potential conflict) between an officer’s duty of obedience to the LLC’s board and the officer’s duty of disclosure to investors.
Insolvency practitioners and other potentially affected stakeholders, such as company directors and corporate trustees, should watch this space carefully to keep abreast of any changes to their obligations.