ASIC is becoming more serious and more active and will take action against directors if there is su cient reason to, so insolvency practitioners should consider all possible actions/recoveries fully in any report to ASIC.
A company's financial distress presents a challenge for its directors and officers of large and complex financial services companies and can raise a range of difficult issues, including potential liability for insolvent trading, which potentially exposes directors both to civil and criminal consequences under the Corporations Act 2001(Cth).
Liquidators have more certainty about their ability to disclaim the environmental liabilities and responsibilities of a company in liquidation.
The Court will closely examine the relevant transactions involving the accounts and form a view – which may be an impressionistic one – as to the likely extent of the interest of each client (or each client group) in those accounts.
We are seeing attempts by the Chinese Government to provide the market with more sophisticated tools for dealing with unprofitable companies.
China is attempting to align its insolvency regime to international standards and introduce additional tools for dealing with the country's rising debt load.
Australian lenders with exposures to these debts (particularly in the coal, steel, manufacturing, cement, shipbuilding, solar, heavy machinery, mining and property sectors) should reassess insolvency risk and understand their options.
Key Points:
It's unclear that safe harbours by themselves will provide genuine opportunities for restructuring distressed businesses.
The Productivity Commission's upcoming report on corporate insolvency will address two burning issues: ipso facto clauses and how to encourage directors to save financially-stressed companies.
One of the many changes to be implemented as part of the Federal Budget delivered last night was a change to the Fair Entitlements Guarantee (FEG) (previously known as the General Employee Entitlements and Redundancy Scheme or GEERS), which guarantees certain unpaid employee entitlements in the event of insolvency or bankruptcy of that person's employer.
Key Points:
What the protracted negotiations surrounding Nine Entertainment have demonstrated is the importance of an interested party being able to assert they have an economic interest in the company.
Key Points: The High Court held there was no variation in the terms of the Charge and therefore no registration was required.
On 1 September 2010 the High Court handed down its much anticipated decision in the appeal from the Queensland Court of Appeal in Re Octaviar Ltd (No 7) [2009] QCA 282, unanimously dismissing the appeal in Public Trustee of Queensland v Fortress Credit Corporation (Aus) 11 Pty Ltd [2010] HCA 29.
The fixed and floating charge
The abolition of the "peak indebtedness" rule will complicate liquidators' tasks, not least its adverse effect on pursuing preferences where it's unclear what forms the single transaction.
The equitable doctrine of marshalling can protect the security interests of subordinate secured creditors when a debtor becomes insolvent.
Marshalling is a neglected tool in the insolvency toolbox, but it can play an important role in protecting the security interests of subordinate secured creditors.