Our Restructuring & Insolvency Team reflects on the year, the industry trends and significant matters of 2022. The Team also looks forward as to what the next 12 months may have in store.

Contents:

What is Illegal Phoenix Activity?

The Australian Securities & Investments Commission (ASIC) defines illegal phoenix activity as activity that occurs when a new company, for little or no value, continues the business of an existing company that has been liquidated or abandoned to avoid paying outstanding debts, including taxes, creditors and employee entitlements.

The Court’s decision in Barokes Pty Ltd (in liq) [2022] VSC 642 is important because, for the first time in Australia, a Court has granted a creditor leave to bring a derivative action in the name of a company in liquidation against its liquidators. This case opens another significant gateway for creditors to seek redress for their losses.

The Parliamentary Joint Committee on Corporations and Financial Services (the Committee) has 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”.^[1]

Major restructuring destinations each provide distinct mechanisms for rehabilitating companies in distress. Our table sets out the similarities and differences in the processes available in Australia, England & Wales, Hong Kong, Singapore, and the USA.

Object of schemes of arrangement

Object

Liquidation involves the collection of the company's assets, the realisation of those assets and the distribution of the proceeds of their sale to the company's creditors.

Process of appointing liquidator

Keeping on top of the latest financial services regulatory and compliance trends?

Investing time in your professional development within a rapidly changing financial services industry is challenging. To meet that challenge, the Australian Regulators Weekly Wrapis designed to keep you at the forefront of your practice by quickly setting out the top five developments from the past week, analysis and practical considerations for the future.

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.