Restructuring & Insolvency: 2021 Year in Review
Our Restructuring & Insolvency Team reflects on the year, the industry trends and significant matters of 2021. The Team also looks forward as to what the next 12 months may have in store.
The past 18 months have provided many challenges for practitioners in the insolvency market. The global pandemic has been the primary driver of government policy over the past 18 months and this has been seen no less in the restructuring and insolvency market. With fears of an economic catastrophe following the announcement of a global pandemic in March – April 2020 Government stimulus, coupled with emergency amendments to the insolvency laws saw the proverbial “can” of looming mass business failures and unemployment “kicked long and hard down the road”.
There have been a number of developments in the Restructuring and Insolvency space in 2021 including:
- The commencement of Part 5.3B of the Corporations Act 2001 (C’th) (Act) and Debtor Restructuring Plans
- The commencement of new laws by which directors became subject to new requirements to effect resignation to assist the Regulator and Liquidators to combat ‘phoenix’ activity from 18 February 2021
- The increase of the corporate statutory threshold to wind up a company to $4,000 from 1 July 2021
- The commencement of compulsory director ID numbers, requiring directors to apply for a director ID number (DIN) to prevent the use of false identities from 1 November 2021
The Team has assisted in the making of submissions to a number of government inquiries including:
- schemes of arrangement
- reviewing safe harbour
- clarifying the treatment of trusts under insolvency law
Early in 2021, we acted for one of the first Restructuring Plans coming before the Courts under the new Part 5.3B.
Government stimulus and monetary policy through 2021 has again seen any immediate adverse economic impact of the pandemic averted, at least for now. Insolvencies throughout 2021 have remained well below historical levels. Yet the ever increasing number of vacant store fronts in our major cities and suburbs may tell a very different story.
With inflationary pressures starting to creep up late in 2021 and a tight labour market in some sectors, interest rates are being closely watched for any upward movement.
There remains a burgeoning outstanding tax debt within the economy and there are some signs the ATO is looking to reel this back in, which may be the catalyst for delinquent tax payers to finally determine “enough is enough”, while those empty store fronts begs the question of just how many “zombie” companies may be out there. With a looming Federal election in the first half of 2022, it should not be presumed the ATO is going to wholly take the gloves off in its pursuit of defaulting tax payers.
So at least in the first half of 2022, we expect the long-awaited tsunami of insolvencies to again be avoided.
In 2021, a number of new appointments and promotions were made across the Team nationally, as the firm continues to strengthen our service to clients.
Joel Shaw joined the firm as a restructuring and insolvency partner in our Brisbane office. Joel specialises in restructuring and corporate and personal insolvencies and commercial disputes. His appointment takes the national team to eight partners across our five offices, with significant growth over the last three years.
Stephen Kyrou from our Melbourne team was promoted to Senior Associate on 1 July.
We are also pleased to announce the promotion of Penny Carter and Jesse Dwyer to Associate as of 1 January 2022.
Throughout the year, we have continued to represent and advise our clients across various industries and geographies, in all aspects of insolvency law. From high profile bankruptcy Part X administrations, to navigating bankruptcy trustees through the storms of vexatious litigants. From complex restructures within DOCA’s to navigating the perils of insolvent trustees.
Cases have included:
- Acting for the Liquidator of a Corporate Authorised Representative to AFSL holder involving complex tracing following breaches of the AFSL and misleading and deceptive conduct.
- Acting for the administrator of a group of companies involved in print media distribution – involving complex issues arose as all trustees of trusts, a number of which had vested a decade prior to appointment. A pooled DOCA was approved with approx. $12m in contributions including from realisations of trust assets as approved by the Court.
- Acting in the clean up and sale of an ASX-listed shell via a DOCA with a Creditors’ Trust;
- Acting in recapitalisation and restructure via creditors trust of ASX listed mining company.
Some of the reported matters in which the Team has supported practitioners include:
- LNDN and Inspector – General in Bankruptcy  AATA 1995
- Re Antiquip Hire Pty Ltd (In Liq) NSWSC 1122
Our Team has received a number of individual and team accolades this year. We thank our clients and colleagues for their ongoing support.
Business Development activities
Piper Alderman’s Personal Insolvency Forum (PIF) event series had another successful year in 2021, with three hybrid events delivered in person in Adelaide and online across the country. The PIF series is designed to educate and support our clients with practical advice delivered by our team of experts, who aim to simplify some of the complex technical aspects of insolvency in what can often be a highly charged and inflexible environment. Each session features prominent industry leaders as well as Piper Alderman restructuring and insolvency law experts.
The Team also produced a number of insights and case studies.
The Team continues to support ARITA with representatives on local committees and the national board, and are actively involved with the Law Council of Australia’s Insolvency & Reconstruction Committee. Our Team also contributes regularly to ARITA case updates and regularly presents at local ARITA Forums and the ARITA online expert series. Thomas Russell has also published several articles in the Law Society Journal this year.