Modernising business registers and director identification numbers

By Natasha Toholka (AU) and Deborah Tsai (AU) on July 22, 2020 Posted in Australia

A package of five legislative reforms — Commonwealth Registers Bill 2019, Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019, Business Names Registration (Fees) Amendment (Registries Modernisation) Bill 2019, Corporations (Fees) Amendment (Registries Modernisation) Bill 2019, and National Consumer Credit Protection (Fees) Amendment (Registries Modernisation) Bill 2019 — received royal assent on 23 June 2020.

These amendments introduce significant changes to the management of Australian business information by Commonwealth bodies, and improve regulation of company directors through the introduction of Director Identification Numbers.

A New register

The Commonwealth Registers Act 2020 (Cth) combines the Australian … Continue Reading

Directors Can Stop the Zombie Company Pandemic

By Scott Atkins (AU) and Dr. Kai Luck (AU) on May 25, 2020 Posted in Australia

In the article, “Will the real zombie please stand up? The opportunity for directors to take control,” Scott Atkins and Dr Kai Luck continue their analysis of the risk that global fiscal stimulus and support measures in response to COVID-19 will be used by some entities to continue trade even when they have no realistic prospect of long-term profitability.

There are personal liability laws for directors that should now provide directors with an incentive to seek assistance from expert restructuring advisers to assess a company’s viability and, if its downturn is endemic, to look to formal insolvency options.

Directors who … Continue Reading

VIDEO – Use of schemes as UK debt restructuring tools

By Matthew Thorn (UK), Mark Craggs (UK) and Grace Carpenter (UK) on May 22, 2020 Posted in UK

Our video, Use of schemes as UK debt restructuring tools, provides insight into the circumstances in which schemes can be used in restructuring transactions where there are minority hold-out creditors and it is not possible to reach unanimous (or near-unanimous) approval thresholds for desired amendments to the finance documents and/or the capital structure.… Continue Reading

The new pandemic: Zombie companies will eat Australia’s COVID-19 economic recovery

By Scott Atkins (AU) and Dr. Kai Luck (AU) on May 21, 2020 Posted in Australia

In this article, Scott Atkins and Dr Kai Luck consider how the extraordinary government fiscal and stimulus measures introduced in response to COVID-19 may provide an incentive for so-called zombie companies—those that were facing endemic operational and liquidity issues pre-crisis and that have no realistic prospect of successful trade in the long-term—to continue on for the next 6 to 12 months, preventing the recycling of important capital needed to reinvest in the innovative new business ventures that will drive economic recovery and eventual growth.… Continue Reading

COVID-19: From black swan to boiling frog

By Scott Atkins (AU) and Dr. Kai Luck (AU) on May 20, 2020 Posted in Australia

Scott Atkins and Dr Kai Luck examine in this article how underlying corporate governance and risk failures may have contributed to boards being caught so off-guard by COVID-19 and how COVID-19 ‘tunnel vision’ (focused only on pandemic-related business continuity and risk management plans) may lead to companies being exposed to equally devastating risks in other contexts—including climate change and cybersecurity—as the economic recovery period commences across the globe.… Continue Reading

The shift we needed: The fight to save Virgin already changing corporate rescue laws in Australia

By Scott Atkins (AU) and Dr. Kai Luck (AU) on May 19, 2020 Posted in Australia

In this article, Scott Atkins and Dr Kai Luck look at the important role Australian courts can play in creating a stronger corporate and business rescue culture to help financially distressed but long-term viable entities navigate the economic downturn caused by COVID-19.

Since this article was written, the Federal Court of Australia granted further orders on 13 and 15 May 2020 exempting the voluntary administrators from personal liability for new contracts entered into as they seek to restructure the Virgin entities (which operate Australia’s second major airline) with a view to a going concern sale to a third party.

Looking … Continue Reading

Don’t panic this pandemic: new safe harbours for directors in COVID-19

By Natasha Toholka (AU) and Deborah Tsai (AU) on May 15, 2020 Posted in Australia, Singapore, UK

In recognition of the significant economic impact of COVID-19, several jurisdictions have passed (or propose to pass) legislation to provide temporary relief for directors of businesses in financial distress, and hopefully mitigate some of the economic effects of the COVID-19 pandemic.

Australia

Relevant Act: Coronavirus Economic Response Package Omnibus Act 2020 (Cth)

Length of Grace Period: 6 months from 25 March 2020 (unless extended by legislative instrument)

The minimum debt which can form the basis for a statutory demand has been increased from AU$2,000 to AU$20,000. The period within which the debt must be paid or an application made to … Continue Reading

Global financial response to the COVID-19 crisis

By Howard Seife (US) on April 8, 2020 Posted in Bankruptcy Courts, Involuntary Bankruptcy, US

We have launched our interactive cross-border guide to the financial support on offer to businesses during the COVID-19 crisis and considerations for banks, corporates and directors trading through the turmoil.

We also look at some of the issues being considered in the lending market as well as changes in insolvency law, reviewable transactions and tips for good governance of distressed companies.

Hopefully this guide will be of assistance to global operators looking to compare and contrast the impact of the crisis on their financial arrangements across a number of relevant jurisdictions.

A link to the product is here: https://www.nortonrosefulbright.com/covid-19-InternationalGovernmentResponse

Howard … Continue Reading

UK Update: Foreign solvent proceedings not recognised in England under the UNCITRAL model law (as enacted)

By Matthew Thorn (UK) and Joseph McHale (UK) on February 21, 2020 Posted in Europe, UK

Introduction

In Carter v Bailey and Hutchinson (as foreign representatives of Sturgeon Central Asia Balanced Fund Ltd) [2020] EWHC 123 (Ch), the English High Court found that a foreign solvent liquidation could not be recognised under the Cross-Border Insolvency Regulations 2006 (CBIR) (which enacted the UNCITRAL Model Law on Cross-Border Insolvency in Great Britain). Accordingly, the court terminated the recognition order granted previously.

Key points to note

It was held to be contrary to the purpose and object of the UNCITRAL Model Law to interpret “foreign proceedings” as including solvent debtors and proceedings directed to producing returns for members instead

US group uses an English scheme of arrangement to restructure its debts

By Matthew Thorn (UK), Mark Craggs (UK), Evan Cobb (CA) and Francisco Vazquez (US) on January 10, 2020 Posted in UK, US

On 10 September 2019 the High Court in London sanctioned two schemes of arrangement as a part of the successful restructuring of the syncreon group. This transaction was unique because it involved a US based group utilising an English scheme of arrangement to surgically restructure its debts, avoiding an all-encompassing insolvency process. Recognition of the English procedure was obtained in the US and Canada.

The syncreon group is a global specialized contract logistics company supplying the automotive and technology industry. The group is headquartered in Michigan, USA with over 100 locations in 20 countries and 14,000 employees worldwide.

As … Continue Reading