This article was first published in the Australian Financial Review on Thursday, 22 February.
In the five years to November 2017, AUD1.8 billion of GST revenue was written-off due to phoenixing – where companies are stripped of assets and liquidated, then restarted under a different name leaving creditors out of pocket.
This article was first published by INSOL International in December 2017.
The Safe Harbour reforms that became law on 19 September 2017 aim to create a better environment for the effective corporate rescue of distressed companies.
On 1 June 2017, the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 (Bill) was introduced to the House of Representatives. The Bill introduces amendments to the Corporations Act 2001 (Cth) (Act) that are aimed at providing a safe harbour for directors from potential insolvent trading liability and also at restrictions on the enforcement of ipso facto clauses.
New Law to Encourage Informal Restructuring
On 28 March 2017, the Federal Government released its long awaited draft legislation that is designed to encourage restructuring of distressed businesses.
The proposed legislation is open for consultation with the finalised legislation expected to come into effect on 1 January 2018. There are two proposed changes:
Australia Restructuring and InsolvencyAlert
On 28 March 2017, the Federal Government released its long awaited draft legislation for reforms to insolvency laws in Australia. The changes focus on providing a safe harbour for directors of distressed companies and a stay on the enforcement of ipso facto clauses in contracts.
In a previous Legal Insight, we foreshadowed potential guidance from the ASX on the interaction between the new insolvent trading safe harbour laws and the continuous disclosure obligations of a public company.
The New South Wales Supreme Court of Appeal's decision in Sanderson as Liquidator of Sakr Nominees [1] has given cause for optimism amongst insolvency practitioners. The decision confirms that the correct approach was taken by the Court inIdylic Solutions [2], bucking a trend in recent years of limiting or reducing practitioner remuneration by reference to a proportion of the funds recovered.
An Australian Tale
2017 is shaping up to be a challenging year for insolvency practitioners in Australia, from the Insolvency Law Reform Act 2016 (Cth) (ILRA), which comes with a raft of reforms to practitioner remuneration and creditors' powers, to the new ASIC 'user pay' funding model which could potentially impact negatively on insolvency practitioners and the Fair Entitlements Guarantee (FEG) Recovery Program's pursuit of claims against insolvency practitioners.
Introduction