The beginning of the end for automatic contract termination due
to an insolvency event.
New laws came in to force from 1 July 2018 and restricted the
enforceability of termination clauses in certain contracts where a
voluntary administrator or a managing controller is appointed to a
company.
The amendments are part of a raft of recent legislative changes
aimed at breeding a restructuring culture and driving
entrepreneurship in Australia. When it comes to restructuring, the
truth is, as insolvency practitioners, we have long had our hands
tied when working with what may be salvageable businesses.
A fair chunk of the blame rests on the destructive nature of
these ever-prevalent clauses known as "ipso facto". For
those who are a bit rusty on their Latin, ipso facto literally
translates to "by the fact itself". An ipso facto clause
in a contract is one that says that if a specific event occurs,
then it will trigger some other contractual right. In the context
of
