Solving the Insoluble: Australia

During 1989 and early 1990, Australia experienced a dramatic increase in the level of corporate collapses for 2 principal reasons: 1. the October 1987 stock market collapse, and 2. historically high prime lending rates. The primary legislation governing corporate administration in Australia is the Companies Code of each state and regulations made under that legislation. Insolvency administrations are regulated by the Corporate Affairs Commission and the Supreme Court of each state and the National Companies and Securities Commission. The more common forms of insolvency proceedings are receiverships and liquidations. An alternative to those common forms is the implementation of a formal "Scheme of Arrangement," the principal purpose being to provide a mechanism for the compromise of creditors' and shareholders' claims and the administration of the company in a way that will generally provide some financial benefits to the parties compromising or modifying their rights and that will bind all creditors and members.