Introduction

In a previous article, 'In case of emergency: Using emergency power provisions to appoint a voluntary administrator' we discussed the use of emergency powers in a company’s constitution to appoint a voluntary administrator to a company, as well as the use of court assistance to cure defects in an appointment.

High Court's Landmark Decisions Clarify the Position for Creditors and Liquidators in Insolvency Proceedings

Navigating cross-border bankruptcy: Gilbert + Tobin has assisted in the recognition of foreign bankruptcy proceedings in Australia, acting for the trustees in bankruptcy in a successful application to recognise Singaporean bankruptcy proceedings.

Background

Current economic conditions and market instability are likely to see more Australian companies fall into distress in 2023 — creating both opportunities for proactive restructuring as well as distressed asset sales.

That's one of the predictions in this year's edition of From Red to Black, Clayton Utz's annual review of the dynamics of Australia's Restructuring and Insolvency (R&I) market.

Welcome to the 2023 edition of "From Red to Black", our annual review of significant developments and topical issues in the Australian restructuring and insolvency market.

Restructuring and insolvency professionals are showing real ingenuity when restructuring insolvent businesses, and landlords need to keep up.

Economic downturns create opportunities for the restructuring or acquisition of challenged assets, and we anticipate increased activity in this space in 2023. The indicators pointing in that direction are:

An appeal “of considerable importance for company law” in the UK could affect Australian directors' duties.

In Australia, the existence of a duty to consider the interests of creditors principally arises in the context of the fiduciary duty of directors to act in the best interests of the company. That duty finds expression in section 181(1) of the Corporations Act 2001 (Cth): a director or other officer of a corporation must exercise their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose.

Liquidators accepting a new appointment will have to think carefully if there's a possibility of disclaiming onerous property as part of that appointment.

In Kennedy Civil Contracting Pty Ltd (Administrators Appointed) v Richard Crookes Constructing Pty Ltd v Richard Crookes Construction Pty Ltd; In the matter of Kennedy Civil Contracting Pty Ltd [2023] NSWSC 99, the NSW Supreme Court considered whether a company on the brink of liquidation can take action to enforce a payment claim under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).