In our previous bulletin we discussed the ‘safe harbour’ model in the Government’s suggested reforms to the current insolvency laws.
This bulletin considers another of the focus questions in the Proposal Paper: the voiding of ipso facto clauses relating to insolvency events.
Background
This week’s TGIF considers the decision of Kimberley Diamonds Ltd, in the matter of Kimberley Diamond Company Pty Ltd (in liq) [2016] FCA 1016 in which the Court refused to allow the mandatory examination of a liquidator under s 596A.
BACKGROUND
In July 2015, administrators were appointed to a company which operated a diamond mine. A marketing campaign in respect of the mining operations of the company commenced shortly after the administrators’ appointment.
Welcome to this issue of Herbert Smith Freehills' Australian Construction Dispute Resolution Newsletter.
This newsletter updates you on legal developments relevant to your industry by featuring Australian court decisions and legislative developments of particular interest.
In this issue, we look at:
On 29 April 2016, the Federal Government released a Proposals Paper titled ‘Improving bankruptcy and insolvency laws’.
The Government is proposing these reforms to encourage entrepreneurship and investment. It hopes to reduce the stigma and detriment around failed business ventures, while still balancing the need to protect creditors.
Welcome to the first edition of the Herbert Smith Freehills Guide to Restructuring, Turnaround and Insolvency, Asia Pacific .
This week’s TGIF considers Clive Palmer’s recent challenges to the constitutionality of the Court’s power under the Corporations Act to issue examination summonses.
What happened?
On 18 January 2016, administrators were appointed to Queensland Nickel Pty Ltd (QNI) pursuant to s 436A of the Corporations Act 2001 (Act). The creditors subsequently resolved that QNI be voluntarily wound up and the administrators were appointed as liquidators (the General Purpose Liquidators).
Last month former Kleenmaid director Bradley Young not so valiantly marched into the history books when found guilty of 17 charges of insolvent trading and one count of fraud after one of the longest criminal trials ever held in Queensland. This followed fellow director, Gary Armstrong, pleading guilty to two counts of insolvent trading and one count of fraud.
This week’s TGIF looks at the departure from the general costs rule considered in In the matter of Condor Blanco Mines Ltd (No. 2) in circumstances where the administrator was found not to have discharged the duty of essential neutrality.
In 2014 the liquidators of Walton Constructions were removed by the Federal Court due to a perceived lack of independence arising from a referral relationship.
ASIC v Franklin1 (Walton) was commented on by the media, ASIC and ARITA and brought about changes to the ARITA Code of Professional Practice to expand the scope of disclosure required in relation to referral relationships.
The Australian government is working to significantly reform Australia’s current insolvency laws by mid-2017.
The reforms are intended to achieve greater likelihood of business preservation by introducing the flexibility to achieve real turnaround of businesses in crisis.
The proposed changes include: