find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (1-3 PAE)
Category: Insurance and Superannuation Law | Location: Sydney NSW 2000
· Join a dynamic Firm · Excellent career growth opportunity
View details
In-house lawyer 1-4 PAE
Category: Generalists - In House | Location: Adelaide SA 5000
· Leading Brand · Report to a Dynamic Legal Counsel
View details
Women lawyers weigh in on insolvent trading laws

Women lawyers weigh in on insolvent trading laws

The status quo on the business judgement rule in insolvent trading can't be maintained, according to a league of lawyers. Karen O'Flynn, national coordinator of Clayton Utz's restructuring and insolvency practice, writes.

The status quo on the business judgement rule in insolvent trading can’t be maintained, according to a league of lawyers. Karen O’Flynn, national coordinator of Clayton Utz’s restructuring and insolvency practice, writes. 


Less than 10 years ago, a Supreme Court judge held that insolvent trading liabilities should be relaxed for wives who are directors of family companies. That notion was firmly quashed by the NSW Court of Appeal, which held that it would reinforce gender stereotypes and undermine "the confidence with which potential creditors will deal with small companies in which women participate with their husbands".


Indicative of just how far we've come since then was the recent panel discussion on current issues in insolvent trading hosted by Clayton Utz's national women lawyers network, Momentum and Women on Boards.


The discussion was focussed on the hot button topic of the improvement of directors' statutory defences to insolvent trading liabilities.


The audience of Sydney based board members and business leaders heard a wide range of professional perspectives on the Government's current proposal to introduce a safe harbour defence. The panel was chaired by Clayton Utz's National head of Restructuring and Insolvency Karen O'Flynn and included industry specialist, Janna Robertson from Korda Mentha, Australian Institute of Company Directors' Legal Counsel and Senior Policy Adviser, Gabrielle Upton, and Clayton Utz corporate partner, David Landy.   


Interestingly, despite the diversity of the Panel and the audience, there was broad agreement that, of the three options put up by the Government, only one was worth pursuing. 


Evidence of the inhibiting effect that fear of insolvent trading liabilities can have on board decision-making processes made it abundantly clear that maintenance of the status quo was simply not supportable. At the other end of the spectrum, the government's suggestion that directors should simply be able to invoke a unilateral debt moratorium was impractical and might, in some extreme cases, even encourage phoenix company activities.


David Landy says the preferred option was the internal management/external advice model. Under that proposal, directors could pursue a debt restructuring plan without being liable for fresh debts, provided that they had taken professional advice. 

Landy says that although there was general support for this model, it was emphasised that the devil will be in the details. He says directors were particularly concerned that we should not end up with a statutory defence that simply set the bar too high to be of any practical use.


At the same time, he acknowledges it was recognised that, in those situations where directors have clearly breached their duties, the law could improve the ability of liquidators to bring recovery proceedings. Korda Mentha's Janna Robertson made a strong case for a simplified process to quantify the amount of loss for which errant directors should be liable.


The event was not just about providing expert opinion on the proposed changes to the business judgement rule but was also a useful networking tool for Sydney business women.  Momentum aims to create an environment that maximises the opportunities for women to succeed through active engagement.  



Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Women lawyers weigh in on insolvent trading laws
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Warning
07:03
NT Law Society sounds alarm on mandatory sentencing
The Law Society Northern Territory has issued a warning over mandatory sentencing, saying it hasn’...
Unite
Aug 22 2017
Professionals unite in support of marriage equality
The presidents of representative bodies for solicitors, barristers and doctors in NSW have come toge...
Aug 21 2017
Is your firm on the right track for gig economy gains?
Promoted by Crowd & Co. The way we do business, where we work, how we engage with workers, ev...
APPOINTMENTS
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
opinion
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
Help
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...