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,

The liquidity-fueled lull in restructuring activity provides both an interesting historical echo of the late 1990s and a useful opportunity for market participants to take note of a deceptively interesting opinion in Giuliano ex rel. Consolidated Bedding, Inc. v. L&P Financial Services Co. (In re Consolidated Bedding, Inc.), Case No. 19-50727, 2021 WL 2638594 (Bankr. D. Del. June 25, 2021) (Shannon, J.).

On 14 May 2021, the Supreme People’s Court of the People’s Republic of China (“SPC”) and the Government of the Hong Kong Special Administrative Region (“HKSAR”) signed the Record of Meeting on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region (“Record of Meeting”).

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

In a case with wide-reaching implications for the private equity industry, the U.S. Supreme Court ended a decade-long effort by distressed debt investors to undermine the safe harbor from avoidance actions set forth in Section 546(e) of the Bankruptcy Code. On April 19, 2021, the Supreme Court denied a petition for certiorari in the In re Tribune Company Fraudulent Conveyance Litigation (“Tribune”), preserving the safe harbor defense for LBOs established by the influential Second Circuit.

In June 2020, the Corporate Insolvency and Governance Act (the “CIGA”) introduced a new procedure to the restructuring toolkit in England & Wales, the Part 26A restructuring plan (the “Plan”, see further detail on CIGA in our article here). The Plan is similar to the well-tested English law scheme of arrangement (the “Scheme”), and the English courts have so far relied on the wealth of Scheme case law to guide them in deciding whether to sanction a Plan.

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.

I had an interesting conversation this week with the Evening Standard, considering the prospect of further company voluntary arrangements, or 'CVAs' on the UK high street as the year progresses.

The vast majority of ‘bricks and mortar’ retailers, as well as hospitality venues, are desperately seeking ways to cut their fixed costs to improve their chances of riding-out the pandemic. Leasehold obligations are often among the most significant of those fixed costs, and the CVA offers a well-tested route to compromise those obligations.

2020: ENGLISH INSOLVENCY LAW REFORM

The Corporate Insolvency and Governance Act (CIGA), which came into force on 26 June 2020, introduced the most significant changes to English insolvency law in a generation. It introduced three permanent changes and implemented temporary measures to support businesses affected by the COVID-19 pandemic.

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