New Debtor in Possession and Insolvency Laws

As detailed last month, 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 lodged a DETRR before 31 March 2021 it could provide up to four (4) months of additional relief from insolvent trading laws for companies seeking to appoint a Restructuring Practitioner.

During the month of March only twenty-one (21) companies across Australia lodged a Declaration of Eligibility for Temporary Restructuring Relief and only three (3) companies appointed a Restructuring Practitioner.

 Risk Watch Essentials – March 2021

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

No. of Registered Liquidators in Australia as at March 2021

Registered Liquidators	Australia	NSW	VIC	QLD	WA	ACT	SA	NT	TAS
TOTAL	649	248 (38%)	161 (25%)	110 (16%)	64 (10%)	10 (2%)	46 (7%)	2 (<1)	8 (1%)

Winding Up applications filed with the Court in March 2021

Winding Up Applications	Australia	NSW	VIC	QLD	WA	ACT	SA	NT	TAS
TOTAL	157	38 (24%)	82 (52%)	14 (9%)	13 (8%)	3 (2%)	5 (3%)	2 (1%)	0 (0%)

Analysis:
There has been a significant increase in the number of winding up applications in March 2021 compared with February 2021. There has only been one (1) winding up application filed by the ATO in either February or March 2021.

A total of 157 Winding Up applications were filed throughout Australia in March 2021, the majority of which were in Victoria (82 or 52%), New South Wales (38 or 24%), Queensland (14 or 9%) and Western Australia (13 or 8%). There were smaller numbers of winding up applications filed in the Australian Capital Territory, South Australia and Northern Territory and none in Tasmania during March 2021.

Formal Appointments in March 2021

Formal Appointments	Australia	NSW	VIC	QLD	WA	ACT	SA	NT	TAS
TOTAL	531	217 (41%)	156 (29%)	86 (16%)	26 (5%)	16 (3%)	26 (5%)	1 (0%)	3 (1%)
Court Liquidation	48	18 (38%)	21 (44%)	3 (6%)	2 (4%)	0 (0%)	4 (8%)	0 (0%)	0 (0%)
Creditors’/Members’ Voluntary Liquidation	392	166 (42%)	106 (27%)	75 (19%)	11 (3%)	11 (3%)	20 (5%)	0 (0%)	3 (1%)
Voluntary Administration	91	33 (36%)	29 (32%)	8 (9%)	13 (14%)	5 (5%)	2 (2%)	1 (1%)	0 (0%)

Analysis:
There were a total of 531 formal appointments throughout Australia in March 2021, the majority of which were in New South Wales (217 or 41%), Victoria (156 or 29%) and Queensland (86 or 16%).

The number of Voluntary Liquidations in March 2021 has increased by 35% compared with February 2021.