The Federal Government has released the Exposure Draft for the much anticipated introduction of:

Introduction

After months of drama prompted by the intertwined destinies of a constitutional referendum and the recapitalization of Monte dei Paschi di Siena (“MPS”), Italy’s third largest bank, and following the resignation of the Renzi government, the first important measure approved by the new Italian cabinet was an emergency decree aimed at safeguarding the Italian banking sector.

The High Court of Australia recently dismissed an application brought by former Queensland Nickel Pty Ltd (QN) directors Mr Clive Palmer and Mr Ian Ferguson for a declaration that section 596A of the Corporations Act 2001 (Cth) is constitutionally invalid.

As you may recall, in 2013 ASIC wrote to all liquidators to announce the commencement of an industry-wide project to test all registered liquidators’ compliance with the requirement to publish certain notices on ASIC’s “published notices website” and to lodge forms with ASIC. ASIC refers to this initiative as the “PNW Project”.

A spate of recent decisions approving liquidators’ remuneration on an ad valorembasis had caused some trepidation amongst insolvency practitioners facing the prospect of court fee approval.

A recent decision by the Federal Court of Australia may be useful for liquidators faced with an application to commence or continue civil proceedings against a company in liquidation.

The decision – in brief

A federal district court recently rejected the Pension Benefit Guaranty Corporation’s attempt to hold a buyer of assets liable for the seller’s unfunded defined benefit plan liabilities under a successor liability theory.[1] While the court decided the issue in favor of the buyer, it is a cautionary tale for buyers as it appears to be the first time the PBGC has argued for the application of successor liability in this context and is a depar

Liquidators can rest assured that courts are reluctant to interfere in their commercial judgments or permit liquidators to be personally exposed to mandatory examinations under s596ACorporations Act 2001 (Cth) (Act).

Section 316(b) of the Trust Indenture Act of 1939 (“TIA”) provides that, subject to certain exceptions, the right of a holder of an indenture security to receive principal and interest payments, or to institute suit to enforce such payments after they become due, shall not be impaired or affected without such holder’s consent. Market participants had long viewed Section 316(b) of the TIA as a “boilerplate” provision, contained or incorporated by reference in most high yield indentures, that protected only a bondholder’s right to bring suit to enforce payment obligations.

Companies in distress often undertake a sales of assets to alleviate cash flow or debt repayment issues when other lines of credit or source of funds have been exhausted. Such decisions are not taken lightly, especially as the disposal of assets is likely to detrimentally impact the underlying business or forecasts. Ultimately creditors’ demands and survival instincts will result in action being taken however it is often too late and to the detriment of the business.