In this week’s TGIF, we consider the recent case of Vita Group Ltd, in the matter of Vita Group Ltd [2023] FCA 400, in which his Honour Justice Jackman outlined practical changes to the way schemes of arrangement should be implemented through the Federal Court to make them simpler, faster and more cost efficient.

Key takeaways

The Australian Government introduced two significant new insolvency solutions following the enactment of the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth), as part of the federal government’s JobMaker Plan in response to the COVID-19 pandemic. The first of these solutions is the Simplified Liquidation Process (SLP) which allows eligible small companies to participate in a faster and more financially commercial liquidation process.

The benefits of the process, compared to traditional liquidation, include:

As stated in our previous article, a statutory demand must be addressed to the proper entity (including the correct ACN number) at the registered office address of the debtor company (which can be searched by an ASIC search of the debtor company) in order for it to be considered valid. This statutory demand can be left at or posted to the debtor company’s registered office address or delivered personally to a director of the debtor company who resides in Australia: see section 109X(1) of the Corporations Act 2001 (Cth) in this regard.

A members voluntary winding up (MVWU) is implemented in circumstances where the company’s members no longer wish to retain the company’s structure because its existence is no longer required or useful. It is only available if the company in question is solvent.

A MVWU is the only way to fully wind up the affairs of a solvent company. All outstanding creditors are paid in full, and any surplus assets are distributed to its members. A MVWU also ensures that the interests of the company’s members are protected while the company structure is dismantled.

Restructuring and insolvency professionals are showing real ingenuity when restructuring insolvent businesses, and landlords need to keep up.

Economic downturns create opportunities for the restructuring or acquisition of challenged assets, and we anticipate increased activity in this space in 2023. The indicators pointing in that direction are:

Liquidators accepting a new appointment will have to think carefully if there's a possibility of disclaiming onerous property as part of that appointment.

This week's issue has a strong ESG focus. We cover the Senate Committee's report into the government's Bill to overhaul the existing 'safeguard' mechanism, the outcomes of the ACCC's greenwashing sweep and the ACCC's enforcement priorities for 2023/24. On the financial services front we provide an update on the status of the proposed FAR (which would expand on and replace the existing BEAR). We also provide an update on the progress of measures to further 'modernise' Corporations Act requirements and more…

The first major review of Australia’s corporate insolvency in more than 30 years is underway with public submissions now closed. The review is broad in its scale, considering the entirety of Australia’s corporate insolvency regime and its related practices and procedures.

While the review is relevant to anyone conducting business in Australia, any developments or changes to corporate insolvency laws are particularly important for businesses in financial distress or creditors looking to recoup debts they are owed.

The corporate insolvency review to date

Introduction for Insolvency & Restructuring Case Summaries 2021-2022 It gives us great pleasure to introduce our Insolvency & Restructuring Case Summaries 2021-2022.

This is the first year that we have published a collated version of the Case Summaries in addition to our regular insolvency InFocus updates. The Case Summaries have been produced in response to feedback that this would be a useful resource.

The Probuild and Virgin Australia administrations confirm that virtual meetings in external administrations are now an integral part of insolvency in a post-pandemic world. Although recent changes to the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) provide greater flexibility, there are aspects that insolvency practitioners need to consider and Court directions may be necessary.