The updates to the Guidance Note provide useful guidance on disclosure requirements in the context of the safe harbour reforms but ultimately, the status quo continues.

The ASX has updated its continuous disclosure guidance for entities in financial distress to address uncertainty following the recent introduction of the insolvent trading safe harbour provisions into the Corporations Act. While the ASX has provided useful guidance, unsurprisingly, the position has not changed and directors must continually assess compliance with continuous disclosure requirements.

Following a landmark decision in the Full Federal Court, employees will retain their priority to payment of their entitlements in a company liquidation, even where the company is a corporate trustee of a trust.

The liquidators were not bound to cause Linc to comply with the EPO from the date of the disclaimer.

As deleveraging to control transactions continue to be part of the legal landscape in Australia, we anticipate seeing further examples, particularly where the distressed company is a listed entity. 

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.

On 11 September 2017, the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 was passed by the Senate. The Bill features two key changes to the Corporations Act:

Just because a liquidator asserts you have received an unfair preference, does not necessarily mean you have or that there are no potential defences available to you.

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

It is common for commercial contracts to contain ipso facto clauses, which allow a party to terminate or modify the terms of the contract where the other party experiences an insolvency event. A concern addressed by the Government is that these clauses can prevent a financially distressed company from turning their situation around.

The reforms proposed to combat illegal phoenix activity range from light-touch through to more significant changes to the Corporations Act.