The new ipso facto regime applies to all contracts to be entered into on or after 1 July 2018. Businesses should now be carefully reviewing the effect of that regime on their contracts and whether any of their contracts may be exempt under the Corporations Amendment (Stay on Enforcing Certain Rights) Regulations 2018 published on 24 June 2018.
The types of contracts excluded from the new ipso facto stay
Agencies need to get ready for ipso facto reform by making changes to their contracts, funding agreements and contract administration practices.
Australian Government Agencies face constraints on their ability to terminate agreements where a contractor has entered into voluntary administration or certain other forms of insolvency procedure. The Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act, which amends the Corporations Act 2001 (Cth):
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Companies that have leasing as a small and irregular part of their overall business still must comply with the PPSA if their interests in leased goods are to be protected.
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This case presented a difficult and unique set of circumstances for the court to navigate while the scheme clock was ticking.
The recent approval of the David Jones scheme of arrangement demonstrates how, in the absence of shareholder opposition, the inexorability of a scheme timetable can cause problems for a court when there is a major development after the first court hearing.
The final report of the independent inquiry into insolvency in the NSW construction industry was released on Tuesday for public comment.
The report is lengthy and addresses a wide variety of potential causes of contractor insolvency. It makes 44 recommendations, including reforms of the NSW construction industry to reduce both the incidence of contractor insolvency and its impact on other participants in the industry.
The Australian unit trust industry recently experienced financial difficulties. The formal legal process of handling those difficulties has revealed gaps in the Australian regulatory map.
This article highlights some of those problems and the Government’s response to them.
Background
It is important for a receiver or voluntary administrator to ensure that a proper sales process is undertaken relevant to the circumstances as there is no "one-size-fits-all" approach.
The "true employer" question is one which frequently arises in insolvencies of corporate groups, and it also arises in solvent workplace dispute scenarios. Answering it, however, is often hampered by inconsistent or incomplete records and very divergent returns for employees, depending on the outcome of the question.
Increasingly, formal restructures, whether solvent or insolvent in nature, are closely aligned to court-supervised processes, adding certainty and transparency to the restructuring process.
The restructuring, distressed and debt market in Australia continues to evolve. We have a competitive debt market that constantly seeks out that next transaction. We have an environment of innovation with restructuring professionals seeking to push the boundaries of what may be possible within the current legislative framework, and we have changes to that framework with the introduction of Safe Harbour as a defence to insolvent trading and ipso facto reform which seeks to lock in contracts post-insolvency.