Australia has now entered its first recession in 29 years, and the Australian Government has implemented a number of legislative reforms and other initiatives to support and provide temporary relief to businesses, including stimulus payments, enhanced asset write-off and flexibility in the application of the Corporations Act 2001 (Cth).

Australian banks have historically relied on formal liquidation, voluntary administration and receivership processes available under the under the Corporations Act 2001 (Cth) and under general law where informal restructurings have failed. There has been little appetite for exploring alternative methods to exit distressed situations by debt trading.

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 decision will give liquidators the certainty of knowing that disclaimer of a lease means that a tenant no longer has any interest in the land.

A recent decision of the Victorian Court of Appeal has confirmed that a liquidator of a landlord can disclaim a lease with full effect, so that the land is no longer encumbered by a tenant's interest.

On 17 October 2012, Nine Entertainment announced that it had reached an agreement with representatives of its senior and junior lenders with respect to a restructuring of its financing arrangements. Prior to the announcement, recent business press had been dominated by reports of Nine Entertainment's potential insolvency.

Key Points:

There are various issues of which a secured creditor must be aware in seeking to either comply with its obligations or take steps to enforce a mortgage under the Act.

Victoria's new Farm Debt Mediation Act 2011 (Vic) commenced operation on 1 December 2011 and is largely modelled on the equivalent New South Wales legislation, the Farm Debt Mediation Act 1994 (NSW).

Receivers and employees are the greatest losers from a recent chain of court cases. Unless overturned on appeal or by legislation, the cases impose financial burdens on employees and administrative burdens on receivers.

At stake are employees' accrued leave entitlements and the statutory requirement to pay them once a company enters external administration. Employees of companies in receivership can lose entitlements they would ordinarily receive during liquidation depending entirely on the time at which a company enters administration or liquidation.

A particular focus of the inquiry will be the consequences of such insolvencies for sub-contractors.

In the wake of a recent spate of contractors becoming insolvent, the NSW Government has announced an inquiry into insolvency in the construction industry and is seeking submissions from interested parties. Submissions to the inquiry are due by 14 September 2012.

The proposed scaling back of directors' liability provisions is good news for insolvency practitioners.

In good news for insolvency practitioners, the NSW Government formally adopted the Council of Australian Governments guidelines on "Personal Liability for Corporate Fault" as NSW policy on 31 July 2012 .

What are the "Personal Liability for Corporate Fault" guidelines?

Australia needs to rein in ipso facto clauses in order to develop a turnaround culture for financially troubled companies.

Within hours of Kodak's move into Chapter 11 bankruptcy, the internet was alive with bad jokes:

"Kodak's business didn't develop the way they expected."

"Kodak was overexposed to the GFC."

"Kodak's Chapter 11 hearing was held in camera."

Australian businesses and liquidators might be forgiven for thinking that the bigger joke is Australia's lack of a Chapter 11 turnaround culture.