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ARTICLE · 12 JULY 2018

Ipso facto regulations and M&A transactions

Holding Redlich
Holding Redlich
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Holding Redlich

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The aim of the new regime is to preserve the enterprise value of a business undertaking a formal restructure process.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Esteban Gomez (Formerly With Holding Redlich)
Esteban Gomez (Formerly With Holding Redlich)
Trent Taylor
Trent Taylor
Carl Hinze
Carl Hinze
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Following recent changes to the Corporations Act 2001 (Cth), parties to a contract may be unable to rely on a contractual right to terminate or modify the operation of a contract on the occurrence of certain insolvency-related events of a counterparty to the contract (commonly known as an "ipso facto" provision).

The recent release of the Corporations Amendment (Stay on Enforcing Certain Rights) Regulations 2018 (Cth) (Regulations) clarifies the application of the new "ipso facto" stay regime, including in respect of mergers and acquisitions transactions.

Impact of the new Regulations

Parties entering into subscription agreements, share sale agreements and business sale agreements may still be able to rely upon a contractual right to terminate for insolvency-related events affecting a counterparty. Drafters of such agreements need to ensure the provisions are drafted in a manner which is enforceable. Also, parties may need to consider other agreements or

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