On 1 September 2017, Boart Longyear Limited (Boart), successfully implemented the reconstruction of its US law governed debt using Australian creditor schemes of arrangement (Schemes).

This is a landmark case that will influence Australian corporate reconstructions for years to come.

The case involved approval by the NSW Supreme Court and recognition by the US Bankrupcty Court under Chapter 15 of the US Bankruptcy Code, ensuring cross border effectiveness for the reconstruction.

Highlights

On 11 September 2017, two major reforms to Australia’s insolvency laws – an insolvent trading safe harbour and a restriction on the enforcement of ipso facto rights in certain circumstances – passed through the Senate with certain amendments being made at the final hour. The Bill now awaits royal assent.

In this article we summarise the final amendments made to the Bill and the key improvements compared to the earlier draft legislation.

EXECUTIVE SUMMARY

On 11 September 2017, major reforms to Australia's insolvency laws including an insolvent trading safe harbour and a restriction on the enforcement of ipso facto rights in certain circumstances passed through the Senate. These insolvency reforms amend relevant provisions of the Corporations Act.

The safe harbour provisions commenced on 19 September 2017.

Last year, we reported that Australia had proposed significant insolvency reforms that, in our view, are long overdue ("A Major Leap Forward for Australian Insolvency Laws").

It is a concern for directors in charge of companies experiencing financial difficulty that they may fall foul of the provisions under the Corporations Act 2001 (Cth) regarding a director’s duty to prevent insolvent trading by a company.

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?

1. On 18 September 2017 the Treasury Law Amendment (2017 Enterprise Incentives No. 2) Act 2017 (the Safe Harbour and Ipso Facto Act) became law.
2. 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