• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
[email protected] (02) 9299 4912

Lawyers Sydney | Solicitors in North Shore, Sydney

  • Home
  • Our Story
    • Our Community
    • Our Environment
  • Our Services
    • Sydney’s Premier Commercial Law Firm
      • Starting A New Business
        • New Business Structures
      • Buying & Selling a Business
        • Corporate Mergers and Acquisitions (M&A)
        • Sale or Purchase of Shares in a Private Company
        • FAQ – Sale of Business
        • FAQ – Purchase of Business
      • Commercial Dispute Resolution Law in Sydney
      • Corporate Governance & Asset Protection
      • Intellectual Property & IP Law
      • Contract Law
      • Climate Change, Energy Law & Carbon Trading
    • DEBT RECOVERY LAW
      • Debt Recovery Process
      • Enforcing a Debt or Judgment
      • Car Accidents & Motor Vehicle Claims
    • PROBATE LAW
      • Applying for a Grant of Probate
      • Contesting a Will
      • FAQ’s – Executors and the Administration of Deceased Estates
    • Civil Disputes & Litigation
      • Commercial Dispute Resolution Law in Sydney
        • Shareholder Disputes
        • Partnership Disputes
        • Director’s Disputes
        • Contract & Property Disputes
      • Litigation
        • COMMERCIAL LITIGATION LAWYERS IN SYDNEY
      • Negligence
      • Alternative Dispute Resolution (ADR)
    • Property & Conveyancing
      • Retail & Commercial Leases
      • Selling a Property
        • FAQ – Selling a Property
      • Buying a Property
        • FAQ – Buying a Property
      • Transferring Property in NSW
      • Property Owners Disputes
      • Caveats
      • Mortgages & Securities
      • Option Agreements
      • Electronic Conveyancing in NSW
    • WILL DISPUTE LAW
      • Drafting a Will
        • Children in Wills
        • Letter of Wishes
        • Digital Assets in a Will
      • Power of Attorney
      • Guardianship & Enduring Guardians
      • Elder Law
      • FAQ’s – Wills and Estates
    • Bankruptcy & Insolvency
      • Personal Bankruptcy
        • Bankruptcy Notices
        • Debt Agreements
        • Enforcing a Debt or Judgment
      • Company Insolvency
        • Creditor’s Statutory Demand
        • Creditor’s Petition
        • Winding Up or Deregistering a Company
    • Building & Construction
      • Building & Construction Contracts
      • Building & Construction Disputes
      • Security for Payments Act
    • SYDNEY EMPLOYMENT LAW
    • Insurance Law
    • Public Notary
  • Online Quotes
    • Simple Will Quote
    • Debt Recovery Quote
    • Conveyancing Quote
  • Meet the Team
    • Michelle Rockliff
    • Nicole Rockliff
    • Sarah Mooney
    • Nathan Rockliff
    • Trudy David
  • News & Articles
  • Contact Us
You are here: Home / News / Bankruptcy & Insolvency / Insolvency Law Reform

07/09/2018

Insolvency Law Reform

From 1 July 2018, amendments introduced into the Corporations Act 2001 (Cth) impose a stay on the enforceability of what the legal profession refer to as “Ipso Facto clauses” in relation to certain insolvency events.

An Ipso Facto clause is a clause in a contract which permits termination of the contract, on the occurrence of a certain event, such as an insolvency event. Ordinarily the term ‘insolvency event’ is broadly defined in the contract to include all types of financial difficulty, such as if a voluntary administrator is appointed, a controller is appointed, the company enters into a Deed of Company Arrangement with its creditors, receivers or managers are appointed to the company, the company is insolvent or deemed to be insolvent, and a person has committed an act of bankruptcy.

Not all types of insolvency events are covered by the reforms. The effect of the new legislation is that it will prevent a party from seeking to terminate a contract on the occurrence of certain insolvency events, namely voluntary administrations and where a managing controller has been appointed to the company. The legislation will not operate to stay termination clauses if the company is insolvent.

The rationale behind the introduction of the Ipso Facto law reforms is to enable contracts to continue in the event a company has entered voluntary administration to restructure its affairs and enable companies to attempt to trade out of financial difficulties.  The aim of the reforms, as set out in the Explanatory Statement is “to promote a culture of entrepreneurship and innovation which will in turn reduce the stigma of failure and help drive business, growth, local jobs and global success”. One such example where these reforms will be particularly relevant is in the building and construction industry. If a builder or developer company has various construction projects on foot but is encountering a period of financial difficulty and has thus entered into voluntary administration, the legislative reforms will prevent a party to a contract with the builder or developer from terminating the contract due to the mere fact that the company has entered into voluntary administration.

It should be noted however, that the law reform does not apply to all types of contracts, and specifically excludes, as examples, agreements for sale of business, government licences, and certain agreements relating to securities.

For more information, please contact us online or over the phone on (02) 9299 4912.

Primary Sidebar

Search

Categories

  • Wills & Estate Planning
  • Insurance Law
  • General Legal Services
  • Divorce & Family Law
  • Debt Recovery
  • Civil Disputes & Litigation
  • Business & Commercial
  • Building & Construction
  • Bankruptcy & Insolvency
  • General
  • Uncategorised
  • Taxation
  • Superannuation
  • Services
  • Property & Conveyancing
  • Probate, Estate Administration & Disputes
  • News
  • Employment Law

Online Enquiry

* indicates required field

News & Articles

Managing Employees in Australia given the Impact of COVID-19

  We stress that due to the unprecedented nature of the pandemic and the very rapidly changing landscape, the guidelines below are general in nature and subject to change. Many of the laws that now apply to this situation were not written with regard to what is currently occurring. Therefore please exercise caution in relying […]

Temporary Changes to Insolvency Laws in Australia due to the Coronavirus (COVID-19) Crisis

In a move aimed to lessen the economic impact on businesses and individuals caused by the Coronavirus pandemic, the Australian Government has introduced some changes to insolvency laws in Australia that apply to personal and corporate insolvency regimes. This includes a temporary increase to the threshold in which creditors can issue a statutory demand on […]

Coronavirus (COVID-19) Update

Following on from the extensive reporting in relation to the COVID-19 pandemic we have implemented a number of protocols to enable the business to continue operating if a staff member or principal is diagnosed with the virus and/or the office needs to close for a period of time. Our staff and principals have adopted best […]

Footer

The Rockliffs Lawyers Difference

We provide pragmatic and practical solutions to your legal needs
We have decades of combined experience
Our lawyers and consultants are experts in their field to enable us to give you tailored legal advice to suit your specific needs

Contact Us

  • Suite 14, Level 26, 44 Market St Sydney NSW 2000
  • (02) 9299 4912

Connect With Us

  • Email
  • Facebook
  • LinkedIn

Newsletter

Sign up to our newsletter for updates on our latest news, articles and special promotions!

Our website does not give legal advice. All materials are for informational purposes only and should not be relied upon as legal advice. The use of this website is subject to our:
WEBSITE DISCLAIMER – PRIVACY POLICY – TERMS & CONDITIONS OF USE
Liability limited by a scheme approved under Professional Standards Legislation.Copyright © 2020 · Website hosted by Lift Legal Marketing · Log out