OVERVIEW OF AUSTRALIAN CORPORATE INSOLVENCY REGIMES

Restructuring & Insolvency

Restructuring & Insolvency | i

Overview of Australian Corporate Insolvency Regimes

This document provides a summary of the most common Australian formal corporate insolvency regimes, namely:

voluntary administration;

receivership; and winding up.

It also covers creditors' schemes of arrangement which are increasingly being used in larger restructurings.

The Queensland Court of Appeal has unanimously allowed an appeal by the liquidators of Linc Energy Limited (Linc Energy), holding it was possible to use a disclaimer notice to avoid the consequences of an environmental protection order (EPO) issued under the Environmental Protection Act 1994 (Qld) (EPA).

On November 9, 2017, the Supreme Court of Canada granted the Alberta Energy Regulator and the Orphan Well Association’s request for leave to appeal from the decision in Grant Thornton Ltd. v. Alberta Energy Regulator, 2017 ABCA 124.

On 13 July 2017, the Belgian parliament adopted an Act compiling the existing Belgian insolvency legislation into one insolvency code (the "Insolvency Code"). The Insolvency Code will become law as from its ratification by the King and publication in the Belgian State Gazette, both of which being no more than administrative formalities. The Insolvency Code will apply to any insolvency proceeding opened on or after 1 May 2018.

The proposed schemes of arrangement for certain creditors of Boart Longyear Limited (BLY) - following very recent decisions in New South Wales at trial and now appellate level - are significant for restructuring and distressed investing professionals transacting in Australia. In particular, those decisions explore the principles for separation of affected creditors into classes, and highlight that different treatment of creditors in the same class does not of itself lead to division of those differently treated creditors into separate classes.

In 2016, the Ukrainian parliament passed the Law on Financial Restructuring (the Financial Restructuring Law) with the aim of creating a workable procedure for voluntarily restructuring debt obligations of Ukrainian borrowers. Technically, the Financial Restructuring Law became effective on 19 October 2016 but did not become operational because the required bodies envisaged in the Financial Restructuring Law were not in place.

Globalization is a hot topic these days. It should come as no surprise, then, that the challenges that come with having a global enterprise in financial distress can be complex. The panelists at the INSOL breakout session, Group next (or not): continuing challenges in the treatment of enterprise groups in insolvency, explored what happens when a global organization with businesses in multiple jurisdictions around the world tries to implement a cohesive and coordinated restructuring.

The Singapore Ministry of Law has published for public consultation amendments to the Singapore Companies Act (Cap 50). The amendments, if enacted, have the potential to radically overhaul the existing insolvency and restructuring regime in Singapore. The clear aim of the amendments is to transform Singapore into a hub for cross-border and transnational insolvencies and restructurings.

This update briefly summarises the key amendments which have been proposed and the background to those reforms.

Key Points

Bloom Lake General Partner Limited, Wabush Resources Inc. and related entities (Bloom Lake) received Court protection under the Companies’ Creditors Arrangement Act (CCAA) in 2015 and subsequently virtually all of its assets were liquidated. The remaining assets included preference claims valued at approximately $173 million.

Saudi Arabia finally adopted a modern bankruptcy law on Wednesday 14/02/2018G by virtue of a Royal Decree No. M/50 dated 28/05/1439H (corresponding to 14/02/2018G) (the “BL”). The BL is based on bankruptcy protection laws around the globe, and it replaces the existing outdated framework on bankruptcy which was embedded within the Commercial Court Law and the Bankruptcy Protective Settlement Law.