With the enactment of the ipso factoreform in September this year (which commences operation on 1 July 2018), it is the genuine hope of many insolvency practitioners and others in the market that voluntary administration will become a less value-destructive and, therefore, a more useful tool for company restructures.
The Boart Longyear decisions confirm that class constitution remains a critical issue for review when pursuing creditors' schemes of arrangement.
The New South Wales Court of Appeal has recently confirmed the circumstances in which companies seeking approval of schemes of arrangement will be required to convene separate meetings for different classes of creditors.
Class constitution: key principles
The reforms proposed to combat illegal phoenix activity range from light-touch through to more significant changes to the Corporations Act.
In this article the authors consider the practical aspects of the UK-wide rules for registration of company charges, including features of the new e-filing regime. Statute references are to the Companies Act 2006.
WHY REGISTER?
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):
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).
SAW (SW) 2010 Ltd & Anor v Wilson & Ors [2017] EWCA Cif 1001 (25 July 2017)
The Court of Appeal has held that the validity of a floating charge (and the appointment of joint administrators under that floating charge pursuant to paragraph 14 of Schedule B1 to the Insolvency Act 1986) does not depend on the existence of uncharged assets of the company at the time of its creation, nor upon the power of the company to acquire assets in the future.
BACKGROUND
Randhawa & Anor v Turpin & Anor [2017] EWCA Civ 1201
In a fascinating (and very readable) judgment, the Court of Appeal has held the appointment of joint administrators made under paragraph 22 of Schedule B1 to the Insolvency Act 1986 ("IA 1986") to be invalid because, among other things, the appointment was made following an inquourate board meeting. Readers are encouraged to read the judgment, as the following is merely an overview of the facts and conclusions.
BACKGROUND