APAC FRI Pulse

As 2024 comes into full swing, it is timely to reflect on the lessons from 2023 and the impact that global economies have had on the financial landscape in Australia. Post-global pandemic and in the midst of the current geopolitical environment in the Asia-Pacific, Australia has become a focus for alternative capital providers and distress funds. There are no signs of this activity slowing down in 2024 and in fact, it could be busier. Australia, for example, is very much a creditor friendly jurisdiction for investment with a rule of law and judicial precedent that can be followed. The statutory and governance frameworks are stable and stakeholders (particularly creditors and sponsors), as well as the debtor itself, have access to a range of formal and informal restructuring technologies that are well understood and have been successfully implemented time and again in the market. This issue of the APAC FRI Pulse covers key financial restructuring and insolvency developments across the region.

Credit Bids on the rise in Australia

17 April 2024 - Investors in the Australian market are more sophisticated than ever and – unsurprisingly – so too are the restructuring transactions being promoted by these investors. One such transaction is the credit bid. While not a transaction structure that is formally recognised in Australia, a credit bid is a valuable tool in a financier's playbook that can be implemented to achieve a return where the original financing is unable to be repaid in accordance with its terms.

Schemes of Arrangement in Australia

17 April 2024 - A creditors' scheme of arrangement ("Scheme") can be a powerful restructuring tool implemented to achieve a variety of outcomes for a business, ranging from deleveraging or a debt-to-equity conversion to a merger and/or issue of new debt/equity instruments. When managed appropriately, a Scheme can reshape a business' debt and equity profile, setting it up for an improved go-forward operating platform. Below we set out an outline of the Scheme process in Australia and consider some key features that are unique to Australian schemes.

Statutory Powers of Sale

17 April 2024 - In 2023, we saw an increase in both voluntary administration and receivership appointments in Australia. In the context of Australia's economic climate this was unsurprising — debtor companies were grappling with volatile markets, supply chain disruptions and uncertain economic conditions, and secured lenders were invoking either or both of these regimes as a means of protecting their investments.

Navigating Chapter 11 Restructurings in Australia: How Important is Recognition?

17 April 2024 - In today's globalised economy, local recognition of foreign insolvency proceedings can be essential for the successful implementation of cross-border restructurings. This is particularly relevant in Australia — a popular host for foreign investment and global corporate groups with local assets.

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