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ARTICLE · 12 DECEMBER 2014

FSI report recommends additional flexibility for businesses in financial difficulty

DibbsBarker
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The recommendation encourages these firms to undertake restructuring efforts in the context of greater creditor support.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Macaire Bromley
Macaire Bromley
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Focus: Financial System Inquiry Final Report
Services: Commercial, Financial services, Restructuring & insolvency
Industry Focus: Financial services

The Financial System Inquiry's final report released yesterday, recommends that government consult on possible amendments to the external administration regime to provide additional flexibility for businesses in financial difficulty.

The recommendation makes way for reform which could see Australia benefit from a restructuring 'safe harbour', during which time firms can undertake restructuring efforts in the context of greater creditor support (for example, ipso facto clauses would be suspended) and at a time when directors and their expert restructuring advisers are not exposed to risk of suit such as insolvent trading. The recommendation draws on the cornerstones of a strong business rescue culture, namely, creditors standing still to provide a stable platform, while the firm in

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