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Restructuring & Insolvency

The end of the mining boom and subdued economic growth in Australia has seen an upturn in contentious work in the insolvency and restructuring area. In addition to litigation aimed at maximising returns for secured creditors, there has been an increase in the number of corporate investigations for troubled entities. White collar crime matters are also becoming a common feature of matters in the insolvency space.

Our cross-practice insolvency and restructuring team has earned a strong reputation for providing comprehensive and commercial advice when solving problems that arise when dealing with, or operating, financially troubled companies. Early and decisive intervention and strategic thinking is critical when dealing with potential insolvency matters and maximising results for our clients, which include creditors, debtors, insolvency practitioners, shareholders and company directors.

We are expert in utilising the full range of restructuring options in order to deliver positive outcomes where possible. We are equally capable in circumstances involving creditor enforcement action and associated commercial litigation.

Our highly awarded practitioners combine first class international and Australian experience with the ability to work seamlessly across all aspects of a transaction. This thorough approach to dealing with distressed businesses allows us to fully address the wide range of issues that develop when restructuring troubled companies and protecting our clients’ interests.

Our Experts

REGANAlexwebsitegreySIZEDTH_2.jpg

Alex Regan

Partner Location Sydney Profile
Andrew Korbel.jpg

Andrew Korbel

Partner Location Sydney Profile
David Hallam.jpg

David Hallam

Partner Location Melbourne Profile
DAVIDSONJameswebsitegreySIZEDTH.jpg

James Davidson

Special Counsel Location Brisbane Profile
Jason Salman.jpg

Jason Salman

Partner Location Sydney Profile
John Stragalinos.jpg

John Stragalinos

Partner Location Melbourne Profile
Kirsty Sutherland.jpg

Kirsty Sutherland

Partner Location Perth Profile
Mark Wilks.jpg

Mark Wilks

Partner Location Sydney Profile
CRITCHLEYMatthewwebsitegreyTH.jpg

Matthew Critchley

Partner Location Melbourne Profile
Sam Delany.jpg

Sam Delaney

Partner Location Sydney Profile

Our Experience

420A claims

Corrs has acted for several insolvency practitioners in their successful defences of claims made by borrowers and guarantors for breach of duty in the conduct of post GFC receiverships.

Corrs succeeded in ensuring that all claims were ultimately dismissed by the Court or entirely withdrawn. Many lawyers profess the skill to advise insolvency practitioners on their duties. Very few have Corrs’ experience in defending actual claims and doing so successfully.

More

AlIco Finance Group refinancing and receivership

When Allco Finance Group collapsed under the weight of more than $1 billion of debt, its financiers and receivers faced the challenge of restructuring, refinancing and enforcing against a group comprising more than 850 companies. It was also critical to keep the company’s assets available for sale.

Corrs worked with Ferrier Hodgson to achieve this and secure the sale of Allco’s US$3 billion aviation business, the largest and most complex asset within the Allco Group.

The collapse of Allco Finance Group presented an extremely complex task for its financiers and receivers, with restructuring, refinancing and enforcing against a group comprising more than 850 companies, as well as numerous on and off balance sheet tax structures in jurisdictions across the globe.

Corrs worked closely with Allco’s financiers and the Ferrier Hodgson team to retain and manage the existing business and achieve the final sale. Court proceedings were instigated to maintain the assets available for sale by the receivers, and to restructure certain Allco group companies through a complicated deed of company arrangement and associated creditors trust.

The Allco receivership, of which this successful asset sale was just one component, was one of the three largest receiverships in Australia in 2009. The receivership continues today, with several pieces of high value and complex pieces of commercial litigation in which Corrs continues to act.

In 2014, Corrs represented the Allco receivers in their hard fought and successful court proceedings against the Australian Wholesale Property Fund. Corrs succeed in achieving the rescission of various transactions entered into prior to Allco’s collapse. The practical effect of the litigation was to unlock many tens of millions of dollars of additional recovery for Allco’s secured creditors from an otherwise worthless asset. Corrs also represents the Allco receivers in their court proceedings against Dr Gordon Fell in relation to Allco’s acquisition of Rubicon. Those proceedings will be heard by the NSW Supreme Court in 2015. 

More

Babcock & Brown litigation

Corrs acted for Luxembourg based BGP Investments in its €20 million NSW Supreme Court claim against Babcock & Brown International regarding a series of significant intercompany transactions involving entities in Australia, Malta and Luxembourg.

Centro Properties restructuring

When Centro Properties collapsed, the restructuring had to be innovative to cover more than 600 shopping centres in the US and Australia and stakeholders with significantly divergent interests. The solution, a conversion of more than $1 billion in debt into a ‘hybrid instrument’, set a precedent as an alternative to allowing a company to fall into insolvency.

Corrs’ pivotal role for the US lenders involved bringing together stakeholders to facilitate new money facilities and the splitting of security pools, including three sets of lenders in the US and Australia.

A key task was to re-work documentation to reflect asset realisation and then a stabilisation strategy. The transaction was complicated by the cross-border enforcement and documenting of inter-creditor arrangements under US and Australian law, and by the negotiation of a restructure against the uncertainty of the formal insolvency of trust structures.

Corrs’ role continues today in advising some of the US lenders as the restructure unfolds.

More

Griffin Coal mining restructure

When Griffin Coal Mining Company collapsed in January 2010, Administrators faced the prospect of a fire sale and the loss of 400 jobs. Corrs worked with the Administrators to stabilise the company and secured funding to keep it operating.

The administration and subsequent sale of Griffin Coal was one of the largest administration sales in Australia in 2010 and delivered a fantastic result to creditors.

When part of Ric Stowe’s Devereux Group, the Griffin Coal Mining Company, collapsed in January 2010, Administrators faced the prospect of a fire sale and the loss of 400 jobs if the business could not stabilise and secure financing to keep operating.

With the help of Griffin’s two largest bondholders, the equivalent of Chapter 11 debtor-in-possession financing was arranged – the first time DIP financing had been secured from the US market by an Australian company. This allowed the company to operate for more than a year, allowing restructuring and sale strategies to be considered and implemented.

A complex structure was created with KordaMentha, UBS and Macquarie to sell Griffin’s coal assets (the largest in Western Australia) separately from its power assets, involving the use of deeds of company arrangement and for the first time the creation of two pools of distribution within a deed of company arrangement. Critical operational matters such as port access and coal supply contracts also had to be resolved as part of the sale. The coal assets were sold to Lanco Infratech, the largest ever Indian investment into Australia.

Sale proceeds of the Griffin coal and power assets are anticipated to provide a return to creditors of between 90-100 cents (for each dollar) – a fantastic result given the bonds had traded in the 40c region only two years previously.

The administration and subsequent sale of Griffin Coal was one of the largest administration sales in Australia in 2010 with the enterprise value of the transaction to be around A$2 billion.

More

Perpetual Trustees Limited - Australian Capital Reserve class action

Corrs is advising The Trust Company, a wholly-owned subsidiary of Perpetual Limited, an Australian investment and trustee group, in defence of a class action brought by over 3000 investors in Australian Capital Reserve as a result of the losses suffered when that company was placed into voluntary administration.

PPB Advisory - Administration of Bandanna Energy

Corrs is acting for the administrators of the Bandanna Energy Ltd group of companies, which comprises 19 companies. Bandanna was seeking to build a coal mine through which it would supply coal to the Wiggins Island Coal Export Terminal in Gladstone, Queensland, under a take-or-pay agreement.

Bandanna was not able secure additional funding to continue with the development of the mine and subsequently appointed administrators. Corrs is assisting the administrators deal with numerous complex contracts governing the proposed development.

More

Pre-GFC negligent valuation claims

Corrs has acted for Suncorp Bank and other lenders in multiple NSW Supreme Court and Queensland Supreme Court claims against property valuers. The cases concern valuations prepared by independent property valuers which grossly overstated the true value of development sites over which the lender took security.

The lender relied on the valuations in deciding to make loans of up to $30 million and suffered significant damage when those loans turned sour and the properties were sold at a vast discount to their supposed value.

More

Primebroker litigation

Corrs acted for ABN Amro Clearing in Victorian Supreme Court and Court of Appeal proceedings brought by the receivers of Primebroker Securities Limited following that company’s collapse during the GFC.

The proceedings involved complex questions regarding the construction and operation of a securities lending agreement in an insolvent situation.

More

Receivership of Midwest Vanadium Pty Ltd

Corrs is acting for the receivers and managers of Midwest Vanadium Pty Ltd, and its immediate parent, Atlantic Vanadium Holdings Pty Ltd. Midwest is a vanadium producer which has over AU$500 million of outstanding debt (including US$335 million of 11.5 per cent Senior Secured Notes due 2018).

As a result of a fire at the plant in February 2014, Midwest was reliant on insurance proceeds in order to rebuild the plant and re-commence production. Notwithstanding the insurance policy, a proposed restructuring with the companies noteholders and other secured lenders did not eventuate, leaving the company little alternative but to enter administration (and subsequently, receivership).

More

Our Thinking

Renewable energy for remote Australia - Can our rural and indigenous communities go off-grid?

Debt-funded renewable energy is the practical solution for energy security in remote Australia.

More

Grand Theft Backhoe: PPSA, contractor insolvency and priority over construction equipment and materials

Four lessons to prevent a PPSA disaster happening to you.

More

Directors' duties - Insolvent trading: Five rules to deal with a company in financial difficulty

Directors of companies facing financial difficulty must avoid a ‘head in the sand’ mentality.

More

Curbing the flight of the phoenix - New solutions are needed to address insolvency in the construction industry

Building company insolvencies are rife and state governments must act.

More

“Lock-up” devices put to the test - The battle for Billabong continues

Despite Billabong’s extensive sales process, the Takeover’s Panel has not allowed it to lock itself up so as to deter rival proposals.

More

HIH offers yet another lesson for investors - This time on the dangers of convertible notes

Holders of HIH (NZ) convertible notes have little hope of recovering any of their investment. But it didn’t have to end this way…

More

Ready for take-off: Creating a more creditor-friendly insolvency regime for Australian aviation finance

Australia has signed an international agreement that should lead to cheaper and easier financing of aircraft…but there’s a catch.

More

Head contractor insolvency - Protecting supply chain payments in construction projects using Project Bank Accounts

In government-sponsored construction projects, a new direct payment system could mitigate insolvency risk to employers and subcontractors if the head contractor’s business fails.

More

Is it time for Australia to rethink its approach to financial restructurings?

As a result of the willingness of local lenders to sell debt in the secondary market there has been increased participation from off-shore lenders keen to utilise foreign restructuring techniques in Australia. How should local lenders respond?

More

Our Experience

420A claims

Corrs has acted for several insolvency practitioners in their successful defences of claims made by borrowers and guarantors for breach of duty in the conduct of post GFC receiverships.

Corrs succeeded in ensuring that all claims were ultimately dismissed by the Court or entirely withdrawn. Many lawyers profess the skill to advise insolvency practitioners on their duties. Very few have Corrs’ experience in defending actual claims and doing so successfully.

AlIco Finance Group refinancing and receivership

When Allco Finance Group collapsed under the weight of more than $1 billion of debt, its financiers and receivers faced the challenge of restructuring, refinancing and enforcing against a group comprising more than 850 companies. It was also critical to keep the company’s assets available for sale.

Corrs worked with Ferrier Hodgson to achieve this and secure the sale of Allco’s US$3 billion aviation business, the largest and most complex asset within the Allco Group.

The collapse of Allco Finance Group presented an extremely complex task for its financiers and receivers, with restructuring, refinancing and enforcing against a group comprising more than 850 companies, as well as numerous on and off balance sheet tax structures in jurisdictions across the globe.

Corrs worked closely with Allco’s financiers and the Ferrier Hodgson team to retain and manage the existing business and achieve the final sale. Court proceedings were instigated to maintain the assets available for sale by the receivers, and to restructure certain Allco group companies through a complicated deed of company arrangement and associated creditors trust.

The Allco receivership, of which this successful asset sale was just one component, was one of the three largest receiverships in Australia in 2009. The receivership continues today, with several pieces of high value and complex pieces of commercial litigation in which Corrs continues to act.

In 2014, Corrs represented the Allco receivers in their hard fought and successful court proceedings against the Australian Wholesale Property Fund. Corrs succeed in achieving the rescission of various transactions entered into prior to Allco’s collapse. The practical effect of the litigation was to unlock many tens of millions of dollars of additional recovery for Allco’s secured creditors from an otherwise worthless asset. Corrs also represents the Allco receivers in their court proceedings against Dr Gordon Fell in relation to Allco’s acquisition of Rubicon. Those proceedings will be heard by the NSW Supreme Court in 2015. 

Babcock & Brown litigation

Corrs acted for Luxembourg based BGP Investments in its €20 million NSW Supreme Court claim against Babcock & Brown International regarding a series of significant intercompany transactions involving entities in Australia, Malta and Luxembourg.

Centro Properties restructuring

When Centro Properties collapsed, the restructuring had to be innovative to cover more than 600 shopping centres in the US and Australia and stakeholders with significantly divergent interests. The solution, a conversion of more than $1 billion in debt into a ‘hybrid instrument’, set a precedent as an alternative to allowing a company to fall into insolvency.

Corrs’ pivotal role for the US lenders involved bringing together stakeholders to facilitate new money facilities and the splitting of security pools, including three sets of lenders in the US and Australia.

A key task was to re-work documentation to reflect asset realisation and then a stabilisation strategy. The transaction was complicated by the cross-border enforcement and documenting of inter-creditor arrangements under US and Australian law, and by the negotiation of a restructure against the uncertainty of the formal insolvency of trust structures.

Corrs’ role continues today in advising some of the US lenders as the restructure unfolds.

Griffin Coal mining restructure

When Griffin Coal Mining Company collapsed in January 2010, Administrators faced the prospect of a fire sale and the loss of 400 jobs. Corrs worked with the Administrators to stabilise the company and secured funding to keep it operating.

The administration and subsequent sale of Griffin Coal was one of the largest administration sales in Australia in 2010 and delivered a fantastic result to creditors.

When part of Ric Stowe’s Devereux Group, the Griffin Coal Mining Company, collapsed in January 2010, Administrators faced the prospect of a fire sale and the loss of 400 jobs if the business could not stabilise and secure financing to keep operating.

With the help of Griffin’s two largest bondholders, the equivalent of Chapter 11 debtor-in-possession financing was arranged – the first time DIP financing had been secured from the US market by an Australian company. This allowed the company to operate for more than a year, allowing restructuring and sale strategies to be considered and implemented.

A complex structure was created with KordaMentha, UBS and Macquarie to sell Griffin’s coal assets (the largest in Western Australia) separately from its power assets, involving the use of deeds of company arrangement and for the first time the creation of two pools of distribution within a deed of company arrangement. Critical operational matters such as port access and coal supply contracts also had to be resolved as part of the sale. The coal assets were sold to Lanco Infratech, the largest ever Indian investment into Australia.

Sale proceeds of the Griffin coal and power assets are anticipated to provide a return to creditors of between 90-100 cents (for each dollar) – a fantastic result given the bonds had traded in the 40c region only two years previously.

The administration and subsequent sale of Griffin Coal was one of the largest administration sales in Australia in 2010 with the enterprise value of the transaction to be around A$2 billion.

Perpetual Trustees Limited - Australian Capital Reserve class action

Corrs is advising The Trust Company, a wholly-owned subsidiary of Perpetual Limited, an Australian investment and trustee group, in defence of a class action brought by over 3000 investors in Australian Capital Reserve as a result of the losses suffered when that company was placed into voluntary administration.

PPB Advisory - Administration of Bandanna Energy

Corrs is acting for the administrators of the Bandanna Energy Ltd group of companies, which comprises 19 companies. Bandanna was seeking to build a coal mine through which it would supply coal to the Wiggins Island Coal Export Terminal in Gladstone, Queensland, under a take-or-pay agreement.

Bandanna was not able secure additional funding to continue with the development of the mine and subsequently appointed administrators. Corrs is assisting the administrators deal with numerous complex contracts governing the proposed development.

Pre-GFC negligent valuation claims

Corrs has acted for Suncorp Bank and other lenders in multiple NSW Supreme Court and Queensland Supreme Court claims against property valuers. The cases concern valuations prepared by independent property valuers which grossly overstated the true value of development sites over which the lender took security.

The lender relied on the valuations in deciding to make loans of up to $30 million and suffered significant damage when those loans turned sour and the properties were sold at a vast discount to their supposed value.

Primebroker litigation

Corrs acted for ABN Amro Clearing in Victorian Supreme Court and Court of Appeal proceedings brought by the receivers of Primebroker Securities Limited following that company’s collapse during the GFC.

The proceedings involved complex questions regarding the construction and operation of a securities lending agreement in an insolvent situation.

Receivership of Midwest Vanadium Pty Ltd

Corrs is acting for the receivers and managers of Midwest Vanadium Pty Ltd, and its immediate parent, Atlantic Vanadium Holdings Pty Ltd. Midwest is a vanadium producer which has over AU$500 million of outstanding debt (including US$335 million of 11.5 per cent Senior Secured Notes due 2018).

As a result of a fire at the plant in February 2014, Midwest was reliant on insurance proceeds in order to rebuild the plant and re-commence production. Notwithstanding the insurance policy, a proposed restructuring with the companies noteholders and other secured lenders did not eventuate, leaving the company little alternative but to enter administration (and subsequently, receivership).

Our Thinking

Renewable energy for remote Australia - Can our rural and indigenous communities go off-grid?

Debt-funded renewable energy is the practical solution for energy security in remote Australia.

Grand Theft Backhoe: PPSA, contractor insolvency and priority over construction equipment and materials

Four lessons to prevent a PPSA disaster happening to you.

Directors' duties - Insolvent trading: Five rules to deal with a company in financial difficulty

Directors of companies facing financial difficulty must avoid a ‘head in the sand’ mentality.

Curbing the flight of the phoenix - New solutions are needed to address insolvency in the construction industry

Building company insolvencies are rife and state governments must act.

“Lock-up” devices put to the test - The battle for Billabong continues

Despite Billabong’s extensive sales process, the Takeover’s Panel has not allowed it to lock itself up so as to deter rival proposals.

HIH offers yet another lesson for investors - This time on the dangers of convertible notes

Holders of HIH (NZ) convertible notes have little hope of recovering any of their investment. But it didn’t have to end this way…

Ready for take-off: Creating a more creditor-friendly insolvency regime for Australian aviation finance

Australia has signed an international agreement that should lead to cheaper and easier financing of aircraft…but there’s a catch.

Head contractor insolvency - Protecting supply chain payments in construction projects using Project Bank Accounts

In government-sponsored construction projects, a new direct payment system could mitigate insolvency risk to employers and subcontractors if the head contractor’s business fails.

Is it time for Australia to rethink its approach to financial restructurings?

As a result of the willingness of local lenders to sell debt in the secondary market there has been increased participation from off-shore lenders keen to utilise foreign restructuring techniques in Australia. How should local lenders respond?

Our Experts

REGANAlexwebsitegreySIZEDTH_2.jpg

Alex Regan

Partner Sydney +61 2 9210 6622
Andrew Korbel.jpg

Andrew Korbel

Partner Sydney + 61 2 9210 6537
David Hallam.jpg

David Hallam

Partner Melbourne +61 3 9672 3161
DAVIDSONJameswebsitegreySIZEDTH.jpg

James Davidson

Special Counsel Brisbane +61 7 3228 9802
Jason Salman.jpg

Jason Salman

Partner Sydney +61 2 9210 6160
John Stragalinos.jpg

John Stragalinos

Partner Melbourne +61 3 9672 3238
Kirsty Sutherland.jpg

Kirsty Sutherland

Partner Perth +61 8 9460 1620
Mark Wilks.jpg

Mark Wilks

Partner Sydney +61 2 9210 6159
CRITCHLEYMatthewwebsitegreyTH.jpg

Matthew Critchley

Partner Melbourne +61 3 9672 3258
Sam Delany.jpg

Sam Delaney

Partner Sydney +61 2 9210 6598