Insolvency and restructuring FAQs

Insolvency and restructuring

We're a leading insolvency and restructuring practice that represents insolvency practitioners, corporates, financiers, creditors, directors and shareholders. This provides us with a unique, 360-degree perspective that informs all our guidance and support.

Corporate insolvency mechanisms

Creditors and debt recovery

Mortgages, guarantees and security agreements

Insolvency litigation and recovery action

Insolvency for directors and business owners

Let's talk about debt, maybe...

We believe some potentially difficult conversations have to happen among Australian business people over the next six weeks or so about debt, which will be critical to their business relationships going forward.

A glossary of corporate insolvency mechanisms

One of the little frustrations of practising as a corporate insolvency lawyer is when the media, mainly, misdescribe the type of insolvency mechanism being utilised by a company to manage its financial distress.

Inquiry calls for major reform of Australia's insolvency regime

An inquiry has determined that Australia's insolvency regime is not fit for purpose and requires major reform.

Navigating statutory demands and the presumption of insolvency

A reminder of the crucial role that compelling evidence plays in rebutting a presumption of insolvency.

Purpose vs effect: Federal Court terminates DOCA

This judgment highlights the supervisory role to be played by the courts to ensure that a deed of company arrangement (DOCA) is for a proper purpose.

Let's talk about debt, again...

In August 2020, we wrote about the approaching end to the Federal Government's moratorium on the initiating steps that a business can take to recover debt from another business through the creditor's statutory demand or bankruptcy notice processes.

Draft legislation released for SME simplified liquidation process

The Federal Government is departing from the current 'one size fits all' approach in Australia's insolvency regime in anticipation of an insolvency tsunami caused by the COVID-19 crisis.

Draft legislation released for SME debt restructuring plans

The Federal Government has hailed its recent Exposure Draft legislation to introduce a formal debt restructuring process for micro and small-to-medium companies as an adoption of US-style Chapter 11 bankruptcy procedures.

Former director receives director penalty notice, avoids personal liability

This Federal Court decision highlights an interesting and practical solution for former directors who receive a director penalty notice after their directorship has ended.

Precedent set: No estoppel against the vesting provisions of the Bankruptcy Act

Lander & Rogers acted for the winning trustees in bankruptcy in Jess v McNiven, in the matter of McNiven (No2) [2022] FCA 446.

Debtor in possession or VA-lite? The Government's insolvency reforms to support small business

The Federal Government’s proposed 'insolvency reforms to support small business' are widely reported – the biggest headline being the adoption of a US-style 'debtor in possession' model.

Receivership appointments: resolving doubts

Lately, there seems to be a few more receivership appointments about than in recent years. Given the current economic outlook and the heightened financial pressure faced by businesses, we expect that this increase in receivership appointments, which coincides with a rise in activity in the restructuring and insolvency space, is likely to continue in the short to medium term.

Lander & Rogers appoints leading insolvency and disputes partner

Lander & Rogers this week announced the appointment of new partner Jonathon Turner to its commercial disputes practice. Based in Sydney, the former Norton Rose Fulbright partner joins the firm's restructuring and insolvency team with a focus on growing contentious matters, complex litigation and restructuring.

Taking the stress out of a distressed sale of assets or business

Notwithstanding the Federal Government's recent extension of the insolvent trading moratorium to 2021, talk of insolvencies and distressed assets is everywhere.

Government proposes reforms to insolvency regime for small businesses

In the last 24 hours, the Treasurer has announced the Federal Government's plans to significantly reform the insolvency regime for small businesses, with new laws to take effect from 1 January 2021. This is the day after expiry of the Government's current measures that limit creditor enforcement action during the COVID-19 crisis.

Sharpening the axe...

We've all now heard about the expected post-September 'tsunami of debt', an 'avalanche of insolvencies' and the 'fiscal cliff'. Will it or won't it occur?

No gear change: High bar to prove unconscionable conduct reinforced in ACCC v Mazda appeal

The Federal Court has confirmed the high bar for proving unconscionable conduct, dismissing an appeal by the ACCC to overturn the trial judge's finding that Mazda did not act unconscionably towards its customers.

High Court delivers for liquidators with one judgment but takes away with another

The High Court's decisions in Metal Manufacturers Pty Limited v Morton [2023] HCA 1 and in Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2 provide a win for liquidators in one judgment and a loss in the other.

Court decision on director's liability for insolvent trading reiterates importance of good recordkeeping and ATO compliance

The Federal Court's recent decision in Stone (Liquidator), in the matter of RIC Admin Pty Ltd (in liq) v Mandalinic (No 2) [2024] FCA 164 demonstrates the analysis the courts will undertake in determining a director's personal liability for insolvent trading, even when the director does not appear for the hearing.

What happened to all the COVID-19 insolvencies?

Although the predicted 'tsunami' of insolvencies hasn't occurred, businesses should remain vigilant as to the financial wellbeing of their suppliers and customers.

Revisiting the new mandatory reporting obligations to ASIC

Almost twelve months have passed since the mandatory breach reporting amendments to the Corporations Act and National Consumer Credit Protection Act 2009 came into effect.

Insolvency matters: Assessing a company's solvency

An insolvent trading claim was dismissed by the NSW Supreme Court when a creditor was unable to prove that a company was insolvent at the time it incurred its debts.

Competition aspects of acquiring distressed assets

The current difficult trading conditions caused by COVID19 restrictions will inevitably lead to insolvencies and the forced sale of assets. This is unfortunate for the business affected but also creates opportunities for competitors to acquire distressed assets.

Are directors and holding companies liable for their Australian subsidiary's debts - what is "COVID-new" and what hasn't changed?

The Australian Government has made some temporary changes to director and holding company liability during the COVID-19 period. Though the relief is welcomed by business owners, the changes may serve to worsen current solvency issues and encourage directors to take unwise risks. To be prepared, directors should seek advice, maintain records and monitor their Australian businesses closely during this time. See our advice at the end of this article for more.

High Court delivers a win to credit managers on unfair preference claims

The High Court of Australia has provided some useful guidance that will assist credit managers in navigating their roles and in dealing with liquidators demanding repayment of alleged unfair preferences.

Worried about solvency? What you can do now and how your options reduce over time

The COVID-19 global pandemic has without a doubt caused significant social and economic disruption, with many businesses struggling to maintain 'business as usual'. With the situation continuing to evolve, and with no clear end in sight, more and more companies are facing solvency issues.

"Casual" employees now get leave entitlements. What does this mean for insolvent trading?

A Full Court of the Federal Court recently held in Workpac Pty Ltd v Rossato [2020] FCAFC 84 that an employee who was employed as a casual is entitled to back pay for annual leave, personal/carer's leave, compassionate leave and public holidays because the characteristic of 'a firm advance commitment' to offer and accept work meant the employee was a permanent employee rather than a casual. The Court also found that the employer was not entitled to offset the back-pay against the 25% loading that the employee had been paid as a casual, whether by way of common law set-off principles, restitution or under regulation 2.03A of the Fair Work Regulations 2009 (Cth).

Supreme Court confirms adjudicated payments do not need to be paid immediately to insolvent companies

Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq); Ostwald Bros Pty Ltd (in liq) v Seymour Whyte Constructions Pty Ltd [2018] NSWSC 412 (5 April 2018).. The New South Wales Supreme Court recently confirmed that an insolvent construction contractor is not able to immediately enforce its right to payment of an adjudication decision under the NSW Security of Payment legislation (Building and Construction Industry Security of Payment Act 1999 (NSW)) against another party because the parties' rights need to be determined in accordance with section 533C of the Corporations Act 2001 (which provision allows set-offs for mutual credits/debts/dealings against an insolvent company). This position is consistent with other State court decisions in respect of insolvent contractors enforcement rights to payments under Security of Payment legislation.

Lander & Rogers appoints seven new partners and promotes 42 lawyers in largest ever promotions round

Lander & Rogers has elevated 49 lawyers in its latest promotions round - the largest number in the firm's 76-year history.