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Australia’s corporate insolvency regime has undergone significant reform with the passing of the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 (the Bill) through both houses of parliament. One of the key elements of the reforms is the introduction of a “safe harbour” for company directors, operating as an exception to the civil insolvent trading provisions of section 588G(2) of the Corporations Act 2001 (Cth). The new regime will create a safe harbour…
Investors in Australia, represented by Squire Patton Boggs in Sydney, have made history again with another big win over Standard & Poor’s (S&P). They were granted leave to pursue a “tort of deceit” claim, alleging that S&P intentionally altered its ratings methodology to achieve higher ratings in order to serve its business objectives. This is the first time that very technical and detailed allegations of fraud in S&P’s rating methodology have been pleaded worldwide.…
It is anticipated that, by the middle of the year, Australia will see the most significant reform to the corporate and personal insolvency environment in two decades. The reforms, which appear likely to be supported by all sides of government, are designed to promote business preservation and allow greater flexibility in order to ‘turnaround’ distressed companies.…
It is widely accepted that there has been an increase in the number of class actions in Australia; however there have not been many examples of unmeritorious actions. The litigation funders are not in the business of losing money, and it would be unlikely for them to be funding any claims that in their view did not have merit. Without funding, the cases would not get off the ground. Therefore, there should not be any…
Multiple class actions have been commenced in the Australian Federal Court  in relation to losses suffered by investors in synthetic collateralised debt obligations and other financial products, some of which were distributed or sold by Lehman Brothers Australia Ltd (in liquidation) and by certain major Australian banks, and were assigned credit ratings by Standard and Poor’s. The products were variously rated ‘AAA’, ‘AA or ‘AA-‘ by Standard and Poor’s and the Applicants allege that Standard and…
The Federal Court of Australia has approved a settlement, effectively resolving one of the most complex corporate insolvencies in Australian history. On 18 December 2015 the Federal Court of Australia approved a settlement relating to inter-company loans and disputed assets between the liquidators of Lehman Brothers Australia Ltd (LBA) and American parent company Lehman Brothers Holdings Inc. Creditors may receive a dividend of potentially 80 cents in the dollar. This is likely to provide significant relief to…
In December 2015, as part of its National Innovation and Science Agenda, the Federal Government announced a proposal to introduce a ‘safe harbour’ for directors from personal liability for insolvent trading. The proposal seeks to address Australia’s insolvent trading laws, which are significantly stricter than comparable laws in the United Kingdom, Canada and New Zealand. The United States has no insolvent trading laws.  The consequences of breaching Australia’s insolvent trading laws range from directors being personally…
A landmark decision of the Australian Full Federal Court will allow the Applicants to plead market-based causation for claims for misstatements and omissions in an IPO and short form prospectus and for misleading and deceptive conduct claims in respect of various audited financial statements issued by the company Arasor International Limited (“Arasor”). The Court upheld the appeal in a securities class action, Caason Investments Pty Ltd & Anor v Simon Cao & Others NSD 269 of 2015…
The Full Federal Court published its reasons for judgment in allowing an appeal in a securities class action, Caason Investments Pty Ltd & Anor v Simon Cao & Others NSD 269 of 2015 (“Caason”).  Applicants can now plead market-based causation for claims for misstatements and omissions in an IPO and short form prospectus, as well as for misleading and deceptive conduct claims in respect of various audited financial statements issued by the company Arasor International…