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Wrap up: Debtwire Australia Restructuring Forum

Restructuring & Insolvency
Debtwire Conference

Arnold Bloch Leibler (ABL) Partners Genevieve Sexton and Justin Vaatstra shared their views at the Debtwire Australia Restructuring Forum on recent reforms in insolvency and reconstruction, the impact of the Royal Commission and recent high-profile matters including Slater & Gordon.

Debtwire is a leading provider of business intelligence and research, providing news, data and analysis on distressed debt and leveraged finance markets worldwide. 

Some insights from the panel discussions are summarised by Senior Associate Ben Friis-O’Toole below:

Recent reforms – do they go far enough?

Genevieve moderated a panel with presenters from KordaMentha, Deloitte Australia, Moelis Australia and Gilbert + Tobin. The key topics included:

  • the limited practical effect of the new ‘safe harbour’ insolvency reforms 
  • how the ‘ipso facto’ reforms may make certain companies more resilient to administration in the future, but are unlikely to have any material effect in the short to medium term
  • difficulties that arise on implementing transactions under s 444GA of the Corporations Act, including time delays and costs associated with obtaining ASIC and ASX relief (in particular, as a consequence of needing independent valuations)
  • how the more technical reforms that apply to insolvency practitioners do not work well in the context of large restructures, including the prohibition on co-mingling of property 
  • the risk of increased personal liability that administrators face given the growing trend to extensions of convening periods.

Impact of Royal Commission on regulatory activity, governance and financial services

Justin provided insights into whether Boards will be required to give greater consideration to community standards and expectations, and how Boards will respond to the Commission in practice. The topic explored:  

  • Boards will increasingly have regard to community standards and expectations
  • the scope and content of the duty to act in the best interests of a company and organisation's broader objects as drivers of incomes, jobs and wellbeing
  • Boards need to ask not only “is this product or strategy legal?” – but also, “is it right?”

Justin also highlighted the need for cultural change in the sector in light of the Commission’s interim findings, and the challenges associated with effecting that change within large and sophisticated organisations.

Key issues for Boards will include: 

  • conflicted remuneration structures – culture is both shaped by, and reflects, the purposes and goals of the organisation built into its incentives and remuneration structures
  • approaches to regulatory issues and litigation – strong corporate culture is directed not merely at ‘black letter’ legal compliance, but also at ethical business practices
  • broader evaluation of conduct, in light of increased transparency, media scrutiny and reputational risks.

Slater & Gordon, Past, Present and Future?

Genevieve outlined the circumstances that led to Slater & Gordon’s need for a restructure, and the unique circumstances faced by the company. The discussion involved:

  • Genevieve emphasising the nuances that Boards need to consider when steering a company through financial difficulty
  • The Panel also discussed the future of Slater & Gordon as a key player in Australia’s class action and personal injury legal landscape.

ABL was a strategic partner of the Debtwire Australia Restructuring Forum for the second year running. The forum attracted over 140 senior delegates from across the legal, insolvency, banking, corporate advisory, accounting and funds management sectors.

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