This week’s TGIF considers Singh v De Castro [2017] NSWCA 241, where the New South Wales Court of Appeal held that five directors of an insolvent corporate borrower had executed and were bound by personal guarantees.
BACKGROUND
The decision was an appeal from a decision of the District Court of New South Wales finding that five directors of an insolvent corporate borrower had executed and were bound by personal guarantees.
Two key changes made to Australian insolvency law enhance restructuring efforts in Australia and could improve outcomes for US investors.
On 11 September 2017, the Commonweath Parliament passed the Treasury Law Amendments (2017 Enterprise Incentives No.2 Bill). The new legislation:
This week’s TGIF considers whether, in a voluntary administration, a report to creditors constituted sufficient disclosure and whether the proponent of a DOCA should be allowed to vote as a creditor in favour of that DOCA.
WHAT HAPPENED?
- On 18 September 2017 the Treasury Law Amendment (2017 Enterprise Incentives No. 2) Act 2017 (the Safe Harbour and Ipso Facto Act) became law.
- The Safe Harbour reforms introduced in the Safe Harbour and Ipso Facto Act create a safe harbour for company directors from personal liability for insolvent trading if the company is undertaking a restructure outside formal insolvency processes.
Division 65 and the New Strict Liability Regime
Introduction
As part of the significant reforms to insolvency and bankruptcy laws introduced by the Insolvency Law Reform Act 2016 (ILRA), parliament has sought to condense and simplify the requirement for external administrators to avoid conflicts of interest.
In our previous blog post, we examined the decision of the New South Wales Court of Appeal to uphold the composition of classes of creditors in the Boart Longyear restructuring by way of scheme of arrangement.
We are now past the second tranche of changes under the Insolvency Law Reform Act 2016 (Cth), comprised most importantly of Part 3 of the Insolvency Practice Schedule (IPS) (containing the General Rules relating to external administrations) which came into effect on 1 September 2017.
Part 3 of the IPS will apply to external administrations that start on or after 1 September 2017.