New Debtor in Possession and Insolvency Laws

From 1 January 2021, the Government introduced some core structural changes to the reconstruction and  insolvency regime which include the following:

• A Debtor in Possession restructuring process for small businesses, whereby a company can avoid liquidation and appoint a Restructuring Practitioner, for further information please follow the link below:
  www.rodgersreidy.com.au/small-business-restructuring-sbr
• A simplified liquidation process, for further information please follow the link below:
  www.rodgersreidy.com.au/simple-creditors-voluntary-liquidations
• Declaration of Eligibility for Temporary Restructuring Relief (“DETRR”) – if a company lodges a DETRR before 31 March 2021 it can provide up to four (4) months of additional relief from insolvent trading laws for companies seeking to appoint a Restructuring Practitioner, for further information please follow the link below:
  https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/temporary-restructuring-relief

During the month of February, only eighteen (18) companies across Australia lodged a Declaration of Eligibility for Temporary Restructuring Relief and only three (3) companies appointed a Restructuring Practitioner.

Risk Watch Essentials – February 2021

The tables below summarises the data essentials captured from our daily Risk Watch publication, which provides a synopsis of the insolvency market for February 2021.

No. of Registered Liquidators in Australia as at February 2021

Registered Liquidators	Australia	NSW	VIC	QLD	WA	ACT	SA	NT	TAS
TOTAL	655	256 (38%)	160 (25%)	109 (16%)	64 (10%)	10 (2%)	46 (7%)	2 (<1%)	8 (1%)

Winding Up applications filed with the Court in February 2021

Winding Up applications	Australia	NSW	VIC	QLD	WA	ACT	SA	NT	TAS
TOTAL	32	12 (38%)	14 (44%)	2 (6%)	1 (3%)	0 (0%)	3 (9%)	0 (0%)	0 (0%)

Analysis:
A total of 32 Winding Up applications were filed throughout Australia in February 2021, the majority of which were in Victoria (14 or 44%), New South Wales (12 or 38%), South Australia had (3 or 9%) and Queensland (2 or 6%). There were no winding up applications filed in the Australian Capital Territory, Northern Territory or Tasmania during February 2021.

Formal Appointments in February 2021

Formal Appointments	Australia	NSW	VIC	QLD	WA	ACT	SA	NT	TAS
TOTAL	422	170 (40%)	133 (32%)	62 (15%)	21 (5%)	11 (3%)	17 (4%)	0 (0%)	8 (2%)
Creditors’/Members’ Voluntary Liquidation	290	134 (46%)	65 (22%)	51 (18%)	15 (5%)	9 (3%)	11 (4%)	0 (0%)	5 (2%)
Court Liquidation	45	15 (33%)	13 (29%)	6 (13%)	3 (7%)	2 (4%)	6 (13%)	0 (0%)	0 (0%)
Voluntary Administration	87	21 (24%)	55 (63%)	5 (6%)	3 (3%)	0 (0%)	0 (0%)	0 (0%)	3 (3%)

Analysis:
There were a total of 422 formal appointments throughout Australia in February 2021, the majority of which were in New South Wales (170 or 40%), Victoria (133 or 32%) and Queensland (62 or 15%).