The latest decision in the Arrium collapse should give some encouragement to Australia's restructuring sector.

Following a lengthy trial of 38 days in the NSW Supreme Court in March and April 2021, Justice Michael Ball (no relation) has handed down the decision in the two proceedings, Anchorage Capital Masters Offshore Ltd v Sparkes (No 3); Bank of Communications Co Ltd v Sparkes (No 2) [2021] NSWSC 1025.

In dismissing these proceedings, Justice Ball has given some comfort to restructuring in Australia,

Before embarking on any litigation, or continuing any litigation that is on foot at the time of the liquidator's appointment, a liquidator should carefully weigh up the benefits and risks of pursuing a particular course of action.

A liquidator can be exposed personally in litigation. We discuss the risks to a liquidator associated with litigation by examining some recent cases where liquidators have been ordered to pay costs personally. We provide guidance on ways to mitigate this risk.

Balancing risk – weighing up competing priorities

Externally-administered companies will have 24 months to comply with financial reporting and AGM obligations, if ASIC's proposal goes ahead.

ASIC relief defers obligations to lodge financial reports and hold annual general meetings for companies in external administration by 6 months. Companies in liquidation (other than AFS licensees) do not have to comply with financial reporting or AGM obligations at all.

Last week saw the government further extend COVID-19 emergency insolvency provisions until 31 March 2021. Since April, these have:

Companies post-restructuring are not subject to the rules protecting creditors of insolvent companies in section 588FL of the Corporations Act 2001.

What are the principal types of insolvency proceedings?

In our previous update dated 5 November 2020, we looked at when it is reasonable for insolvency practitioners to continue litigation. In this article, we explore the circumstances in which personal costs orders may be made against liquidators.

Key points

Today, new legislation comes into force* that provides directors of companies in financial difficulty with a second breathing space from the financial impact of the wrongful trading provisions.

On 26 June 2020, the Corporate Insolvency and Governance Act 2020 (Act) came into force with changes to insolvency law to help businesses manage the economic implications of Covid-19. The new Act’s permanent measure on continuing supply stands out for the construction industry.

There remain a number of issues in the proposed insolvency reforms that need careful deliberation, particularly where the Regulations have yet to be released for consideration.