Clifford Chance
Australian Insolvency Law Reforms
4 July 2018
The Insolvency Law Reforms amend the Corporations Act 2001 (Cth) (the "Act") by creating new provisions designed to give greater certainty and flexibility to Australian businesses undergoing or entering into an insolvency process.
The ultimate aims of the Insolvency Law Reforms are to avoid unnecessary and premature administrations, receiverships and liquidations, drive cultural change amongst company directors, and promote the preservation of enterprise value to maximise shareholder and creditor returns. They do this by promoting entrepreneurship and innovation in two forms: (1) providing a 'safe harbour' for directors from the liability of harsh insolvent trading laws; and (2) giving companies breathing room where they are making efforts to trade out of difficult financial situations by preventing the enforcement of 'ipso facto' clauses in certain circumstances.
