Insolvency and Restructuring of Companies in Australia

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Introduction
Article Title : Insolvency and restructuring of companies In Australia and the legal process.
https://www.herbertsmithfreehills.com/doing-business-in-australia/content/restructuring-and-
insolvency
This is an Article written on the Daily Herald on 23rd march 2019 on insolvency and
restructuring of companies in Australia and the legal processes involved in the determination of
the outcomes. Ten years after most countries faced economic downturn due to the global
financial crisis of 2208, most companies in Australia did not show immediate effect. This was
particularly due to the strong growth and performance of the Australian mining and petroleum
sector that had seen high demand from the Chinese market (Baer, et al 2016). However, the
Australian Securities and Investment commission (ASIC) shows that a number of companies
have gone into insolvency.
Effects of Insolvency and Restruction to stakeholders
Last year more than 1000 companies went into insolvent administration and the situation
is expected to worsen. The effect of insolvency is still significant to both shareholders and
creditors. Of the more than 1000 companies that went ionto insolvent, ASIC reports that more
than 95% did not pay dividends to their creditors with the rest paying a dividend of 0 to 10 cents
par dollar owned. This is a reflection of the experience of unsecured creditors during insolvency
and liquidation. Despite this significant impact on unsecured shareholders and creditors, the
Australian law or the reforming insolvency law does not appear to improve the outcomes
(Greenfield, Maguire, Spencer and Lenz, 2017).