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.

Few now remember that Chapter 5C of the Corporations Act can trace its origins to the afternoon of 23 July 1991. For the past year, the unlisted property trust industry had been in meltdown. The value of the assets held by the industry had fallen over 20%. Investors were scrambling to get out, and collapses seemed imminent.

The Australian unit trust industry recently experienced financial difficulties. The formal legal process of handling those difficulties has revealed gaps in the Australian regulatory map.

This article highlights some of those problems and the Government’s response to them.

Background

In the recent case of Dwyer & Ors and Davies & Ors v Chicago Boot Co Pty Ltd [2011] SASC 27, Chicago Boot claimed that certain payments made to it by two insolvent companies were not unfair preference payments, because of, amongst other defences, the purported application of a retention of title clause in relation to the supply of goods by Chicago Boot.

Your insurer goes bust – can you as an insured claim the reinsurance proceeds? An important decision in the NSW Supreme Court gives useful guidance on when a court will allow departures from the statutory scheme controlling the application of reinsurance proceeds (Amaca Pty Ltd v McGrath & Anor as liquidators of HIH Underwriting and Insurance (Australia) Pty Ltd [2011] NSWSC 90).

The insurer goes broke, and there are all these claimants at the door…

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

Key Points: An administrator of a deed of company arrangement has been allowed to sell the company over a shareholder's objections.

The GFC has seen a significant rise in the number of corporate insolvencies.[1]

Many of those insolvencies have been the result of tighter credit, rather than a collapse of the company's business. It's no surprise, therefore, that there is a major appetite for the acquisition of distressed businesses and companies.

The law of "shadow directors" means that a person who effectively controls a board of a company, even though that person is not a director, may find himself being legally classified as a director of the company. That carries with it the threat of legal liability for the company's insolvent trading debts in the event that the company goes into liquidation.

New criteria set out by the Bank of Spain will have a binding nature for supervised financial entities

Introduction

On 30 April 2013 the supervisory body of the Bank of Spain sent a formal communication to the financial entities subject to its supervision containing the criteria to be used with regard to the definition, documentation, follow-up and review of credit refinancing and restructuring transactions (the Communication).

Summary

In one of the most eagerly awaited appeals to affect the restructuring and insolvency community since MyTravel, the Court of Appeal in the European Directories case ruled on Friday 22 October that: