New offences in the Corporations Act, a cab rank system for liquidators, and changes to tax laws have been put forward by the Australian Government in its consultation package of anti-phoenixing reforms released yesterday. Consultation closes on 27 October 2017.
Agencies need to get ready for ipso facto reform by making changes to their contracts, funding agreements and contract administration practices.
Australian Government Agencies face constraints on their ability to terminate agreements where a contractor has entered into voluntary administration or certain other forms of insolvency procedure. The Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act, which amends the Corporations Act 2001 (Cth):
There is much to admire in the EU's handling of the Italian banking crisis, but in allowing two lenders to escape BRRD rules, it has raised questions on the consistency of the EU state aid and resolution framework.
On 11 September 2017, major reforms to Australia's insolvency laws including an insolvent trading safe harbour and a restriction on the enforcement of ipso facto rights in certain circumstances passed through the Senate. These insolvency reforms amend relevant provisions of the Corporations Act.
The safe harbour provisions commenced on 19 September 2017.
In a big 24 hours for restructuring and insolvency, the safe harbour reforms were passed by the Senate late last night, and anti-phoenixing reforms were announced this morning.
Safe harbour reforms
The safe harbour laws will commence operation the day after the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 receives Royal Assent, with the ipso facto provisions set to commence on 1 July 2018 (or earlier by proclamation).
To perfect a security interest by possession, a secured party must have actual or apparent possession of the property. A contractual right to possess is not enough.
We now have the first judicial guidance in Australia on the concept of "perfection by possession" under the Personal Property Securities Act 2009 (PPSA) (Knauf Plasterboard Pty Ltd v Plasterboard West Pty Ltd (In Liquidation) (Receivers and Managers Appointed) [2017] FCA 866).
What is "perfection by possession"?
This review concerns a number of amendments to Federal Law "On insolvency"1 (the "Law") introduced by federal laws No. 222-FZ2 and No. 488-FZ3, and the interpretation of the amendments in the Review of Court Practice on Matters Related to Participation of State Authorities in Insolvency Proceedings and Procedures Applicable in these Proceedings, approved by the Presidium of the Supreme Court of the Russian Federation on 20 December 2016 (the "Review").
This review covers the following most important amendments:
European Leveraged Finance Alert Series: Issue 6
Legislative changes in Italy (starting from 2012) facilitated leveraged transactions facilitating security in both bank and bond financings and aligning bond and bank finance options. These changes have catalyzed creditors’ appetite for Italian leveraged finance transactions and helped fuel a resurgence in M&A activity in Italy. Here are ten (plus one) things to consider when doing a leveraged finance deal in Italy:
The limitations of set-off in a liquidation scenario and the nature and effect of a security interest under the Personal Property Securities Act 2009 (Cth) (PPSA) have been clarified, with significant ramifications for principals and financiers, who should now review their rights, following the WA Supreme Court's decision in Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (In Liquidation) (Receivers and Managers Appointed) [2017] WASC 152 (Clayton Utz acted for the successful receivers).
Safe harbour and ipso facto clauses reforms are closer, with the consultation on the Insolvency Laws Amendment Bill 2017 having closed last week, but further work is needed.
The Federal Government's consultation on the safe harbour and ipso facto reforms in the draft Insolvency Laws Amendment Bill 2017 closed on 17 May 2017, so we now have a better idea of what they will look like.