Recent Developments 

The Law on the Amendment to the Income Tax Law and Certain Laws (the "Omnibus Bill") entered into force upon its publication on the Official Gazette No. 30836 dated July 19, 2019. The Omnibus Bill includes provisions for financial restructuring and tax related matters.

What’s New?

Financial Restructuring

The concept of "financial restructuring" was introduced in Turkey following the country's currency crisis in the summer of 2018. Financial restructuring, defined as revising a debtor's financial structure and redetermining its financial strategy, became the major agenda of Turkish financial institutions. Regulators intervened immediately and began working to form the legal infrastructure for restructuring.

This week’s TGIF considers Tai-Soo Suk v Hanjin Shopping Co Ltd [2016] FCA 1404 in which the Court was required to determine the scope of a stay arising under the UNCITRAL Model Law on Cross Border Insolvency.

BACKGROUND

A Korean shipping company was subject to ‘rehabilitation’ proceedings in Korea. Rehabilitation proceedings seek to ‘rehabilitate’ insolvent debtors by restructuring their debt pursuant to a rehabilitation plan approved by the creditors and the Rehabilitation Court.

This week’s TGIF considers the case of Compton v Ramsay Health Care Australia Pty Ltd [2016] FCAFC 106, where the Court exercised its power to “go behind” a judgment upon which a petitioning creditor relied as proof of a debt that was owed.

WHAT HAPPENED?

This week’s TGIF considers the case of Brandon Industries (Vic) Pty Ltd v Locker Pty Ltd [2016] VSC 373 where the Court dismissed an application to set aside a statutory demand due to the applicant’s failure to establish a genuine dispute or offsetting claim pursuant to section 459H of the Corporations Act 2001 (Cth).

BACKGROUND

This week’s TGIF considers the most recent decision in a line of cases which hold that the provisions of the Code of Banking Practice may be incorporated into loan agreements, as well as guarantees given by individuals.

BACKGROUND

WHAT HAPPENED?

Rahan Constructions Pty Ltd (Rahan) was contracted to undertake commercial construction and other works in about April 2012.  On or about this date, Rahan entered into a credit account with Asset Flooring Pty Ltd (Asset Flooring).  Rahan’s obligations under this credit account were personally guaranteed by the respondent, Mr North.

On 30 July 2013, Rahan was wound up by order of the court and Asset Flooring sought to enforce the guarantee for the outstanding balance owing under the credit account.

In the decision Young, Jr (on behalf of debtor-in-possession of Buccaneer Energy Ltd) v Buccaneer Energy Ltd [2014] FCA 711, the Federal Court of Australia considered whether Chapter 11 proceedings under the United States Bankruptcy Code should be recognised as a foreign main proceeding under the Cross-Border Insolvency Act 2008 (Cth) (CBIA) and Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (Model Law).

In New Age Constructions (NSW) Pty Ltd v Etlis, in the matter of Etlis[2013] FCA 884, an unsecured creditor applied to set aside a Personal Insolvency Agreement (PIA)and also sought a sequestration order against the debtor’s estate.  The Federal Court considered whether the terms of the PIA were unreasonable or not calculated to benefit creditors generally.

The Supreme Court has delivered a judgment providing welcome clarification on the construction and effect of section 123(2) of the Insolvency Act 1986 (the "balance-sheet" insolvency test) and its interaction with section 123(1)(e) of the Act (the "cash flow" insolvency test).