A recent Full Court decision is a win for directors who hold D&O insurance policies, as well as those seeking to bring proceedings against directors of an insolvent company – probably to the dismay of insurers.

Section 37A can be used by future, contingent and prospective creditors to recover assets, meaning the transferor need not be indebted at the time of the transfer.

Recovering assets from a debtor is usually done via the recovery provisions in the Corporations Act 2001 (Cth) or theBankruptcy Act 1966 (Cth), but there is another option, at least in New South Wales, which offers creditors, insolvency practitioners and any prejudiced parties a useful alternative. A recent case demonstrates its advantages (Lardis v Lakis [2018] NSWCA 113; Clayton Utz acted for the successful creditor).

The reforms proposed to combat illegal phoenix activity range from light-touch through to more significant changes to the Corporations Act.

The Australian Government is proposing to constrain certain "ipso facto" clauses ‒ a move which could make flip clauses void. The closing date for submissions is Friday 27 May 2016.

How would changes to ipso facto clauses affect securitisation?

Key Points:

Courts will limit an administrator's liability where proposed funding is to be used directly to advance an agenda consistent with the objects of Part 5.3A of the Corporations Act.

A recent decision of the NSW Supreme Court highlights the flexibility of Part 5.3A of the Corporations Act and the ability of administrators to seek orders protecting their interests and facilitating restructures, and was the first stage of what promises to be a novel and challenging administration (In the matter of Nexus Energy Ltd [2014] NSWSC 1041).

Justice Jacobson's unwillingness to depart from the interests of the majority in relation to Nine Entertainment should give parties confidence that Schemes remain an effective way to effect debt for equity swaps or similar transactions.

Australia needs to rein in ipso facto clauses in order to develop a turnaround culture for financially troubled companies.

Within hours of Kodak's move into Chapter 11 bankruptcy, the internet was alive with bad jokes:

"Kodak's business didn't develop the way they expected."

"Kodak was overexposed to the GFC."

"Kodak's Chapter 11 hearing was held in camera."

Australian businesses and liquidators might be forgiven for thinking that the bigger joke is Australia's lack of a Chapter 11 turnaround culture.

The High Court today gave the first decision, globally, of a Court of ultimate appeal on the question of the construction of Article XI(2) of the Cape Town Convention's protocol on Matters Specific to Aircraft Equipment (Aircraft Protocol), which is of seminal importance for financiers and lessors of aircraft property, insolvency administrators globally.

Liquidators need to be mindful that a disclaimer of property may be challenged. The Supreme Court of Victoria underscored a key issue in establishing "prejudice" to creditors in a liquidation, holding that a disclaimer of property may be set aside where the liquidators are indemnified.

While the High Court has provided some clarity on the operation of the statutory priority regime, insolvency practitioners will still need to tread carefully when dealing with corporate trustees.

For insolvency practitioners who need clarity on how receivers and/or liquidators should pay, out of trust assets, priority employee claims arising from trust liabilities, the High Court's decision in Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth of Australia & Ors [2019] HCA 20 (Amerind) is a welcome result.