Directors are first and foremost responsible to the company as a whole and must exercise their powers and discharge their duties in good faith in the best interests of the company and for a proper purpose. The reference to "acting in the best interests of the company" has generally been interpreted to mean the collective financial interests of the shareholders.

Debtor in possession financing in the US has continued to rise, particularly in the context of retail insolvencies. In Australia, we have seen a number of high profile retail collapses in recent years. Can DIP financing solve the woes of struggling retailers in Australia?

The Boart Longyear decisions confirm that class constitution remains a critical issue for review when pursuing creditors' schemes of arrangement.

The New South Wales Court of Appeal has recently confirmed the circumstances in which companies seeking approval of schemes of arrangement will be required to convene separate meetings for different classes of creditors.

Class constitution: key principles

Key Points:

This case provides some clarification of matters relating to registration of retention of title clauses for secured creditors dealing with grantors

The registration of security interests on the Personal Property Securities Register (PPSR) is a critical, yet unresolved, issue in the context of the appointment of administrators and liquidators, and also for parties to sale transactions.

Orla McCoy explains the connections between retention of title clauses, insolvency, and the Personal Property Securities Act.

Click here to view video.

The recent decision of Modcol Pty Ltd v National Buildplan Group Pty Ltd ^[1] addressed whether leave should be granted to a subcontractor to allow it to commence proceedings against a contractor in administration in respect of the subcontractor's rights under the Building and Construction Industry Security of Payment Act 1999 (NSW) (the SOP Act).

Although the Australian voluntary administration regime served as the model for the UK administration system, one notable difference has emerged between the two systems: pre-packs.

Pre-packs – the use of a statutory insolvency regime to implement a pre-agreed debt / corporate restructuring – have not really taken off in Australia. In the UK, of course, they form a significant proportion of all administrations.

It has taken 12 months, but new legislative provisions are now in place to deal with the problems for representatives of incapacitated entities arising from Logan J's decision in Deputy Commissioner of Taxation v PM Development Pty Limited [2008] FCA 1,886.

The new provisions go beyond merely addressing the outcome of PM Developments. They also introduce new obligations for representatives of incapacitated entities as well as some concessions and protections.

Letters of support take many forms and are issued for a variety of purposes and can generate a serious tension between the interests of various stakeholders — parents, subsidiaries, boards and auditors.

The new debtor-in-possession model for small business restructuring is aimed at allowing viable small businesses to seize the initiative to quickly restructure to survive the economic impact of COVID-19, but we need greater clarity on key elements of the proposed insolvency framework.