A particular focus of the inquiry will be the consequences of such insolvencies for sub-contractors.

In the wake of a recent spate of contractors becoming insolvent, the NSW Government has announced an inquiry into insolvency in the construction industry and is seeking submissions from interested parties. Submissions to the inquiry are due by 14 September 2012.

The proposed scaling back of directors' liability provisions is good news for insolvency practitioners.

In good news for insolvency practitioners, the NSW Government formally adopted the Council of Australian Governments guidelines on "Personal Liability for Corporate Fault" as NSW policy on 31 July 2012 .

What are the "Personal Liability for Corporate Fault" guidelines?

Receivers and employees are the greatest losers from a recent chain of court cases. Unless overturned on appeal or by legislation, the cases impose financial burdens on employees and administrative burdens on receivers.

At stake are employees' accrued leave entitlements and the statutory requirement to pay them once a company enters external administration. Employees of companies in receivership can lose entitlements they would ordinarily receive during liquidation depending entirely on the time at which a company enters administration or liquidation.

The Government has announced that it will be delaying the proposed changes to Conditional Fee Arrangements ("CFA") and After the Event ("ATE") Insurance, in respect of insolvency proceedings, until 2015.

In its recent decision in Lehman Brothers International (Europe) (in administration)¹  the Supreme Court resolves the uncertainty where a regulated firm does not properly segregate client monies. The decision has a number of practical implications, not only for the administration of Lehman Brothers International (Europe) (LBIE) but also for the way client monies are held by institutions.  

Background

Many employers dread triggering debts under section 75 of the Pensions Act 1995 within their defined benefit pension scheme, but in some circumstances it simply cannot be avoided.  Once a section 75 debt has been triggered it is important that the debt is calculated properly.  The Actuary is required to calculate the difference between the value of the scheme's assets and the cost of purchasing annuities to secure all of the liabilities of the scheme.  But what if there is a delay in calculating the debt?  At which date is the Actuary required to ascertain the cost of bu

One could almost be forgiven for thinking that nowadays delayed second creditors' meetings are just par for the course.

Applications to extend the time for the second meeting - often for months - have become quite routine, and are rarely (if ever) refused.

Some observers might thus wonder if we are losing sight of one of the objectives of the VA procedure - that it "should be expeditious".^[1]

Although the Australian voluntary administration regime served as the model for the UK administration system, one notable difference has emerged between the two systems: pre-packs.

Pre-packs – the use of a statutory insolvency regime to implement a pre-agreed debt / corporate restructuring – have not really taken off in Australia. In the UK, of course, they form a significant proportion of all administrations.

The statutory exemption can be refreshed each time a person signs a new contract, even if he/she continues to hold the same position.

Receivers of a failed company have been unable to convince the Federal Court that statutory restrictions on termination payments reduced the payout entitlement of a senior executive (White v Norman; In the Matter of Forest Enterprises Australia Limited (Receivers and Managers Appointed) (in Administration) [2012] FCA 33).

Background

Australia needs to rein in ipso facto clauses in order to develop a turnaround culture for financially troubled companies.

Within hours of Kodak's move into Chapter 11 bankruptcy, the internet was alive with bad jokes:

"Kodak's business didn't develop the way they expected."

"Kodak was overexposed to the GFC."

"Kodak's Chapter 11 hearing was held in camera."

Australian businesses and liquidators might be forgiven for thinking that the bigger joke is Australia's lack of a Chapter 11 turnaround culture.