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

Following a number of recent high-profile collapses of banks in Europe and the United States (notably, Credit Suisse, Silicon Valley Bank, Silvergate Bank and Signature Bank), not only their investors but also their clients may be considering their position under financing arrangements and applicable insolvency law.

Here are five steps that corporate borrowers can take to protect themselves against the fall-out of their financing banks’ insolvency:

Tijdens het Stibbe Annual Debt Finance seminar dat in februari 2023 op het Stibbe kantoor in Amsterdam werd gehouden, werd onder andere gesproken over de tegenwind op de financiële markten en de gevolgen daarvan voor financieringstransacties. Na een schets van de stand van de financiële markten en de vooruitzichten voor 2023 door Marieke Driesen, sprak Niek Groenendijk over de mogelijkheden voor een kredietnemer om zich te wapenen tegen onvoorziene omstandigheden, de belangen van financiële convenanten en andere valkuilen in de financieringsdocumentatie.

When a company becomes financially distressed, directors are often required to act quickly and decisively. However, directors may at the same time find themselves held back by the requirements of the Corporations Act 2001 (Cth) (the “Corporations Act”) or their company constitution.

What is now known as the ‘ipso facto regime’ was introduced by the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017 in September 2017, which inserted a number of provisions that provided for a stay on the exercise of certain ipso facto contractual rights in the context of corporate restructuring and insolvency procedures.

What is an ipso facto clause?

Op 12 juli 2022 is het wetsvoorstel Tijdelijke wet transparantie turboliquidatie (het "wetsvoorstel") ingediend. Het wetvoorstel ziet op de tijdelijke aanpassing van de wettelijke regeling omtrent turboliquidatie en bevindt zich nog in de voorbereidingsfase.

Corporate Australia is bracing for the long-awaited surge in insolvencies. As Australia’s largest creditor and, according to creditor reporting bureau Creditor Watch, responsible for the greatest number of company windups prior to the pandemic in 2019, the ATO can fairly be described as an influential, if not dominant, player in the restructuring and turnaround space and in corporate Australia more broadly.

The ATO effect

Contents:

Overview of corporate insolvency in Australia

On 28 September 2022, the Federal Government, through the Parliamentary Joint Committee on Corporations and Financial Services (the Committee) commenced an inquiry into the effectiveness of Australia’s corporate insolvency laws in protecting and maximising value for the benefit of all interested parties and the economy.