The Turnaround Management Association of Australia (the TMA) welcomes the opportunity to provide submissions in response to the consultation paper Helping Companies Restructure by Improving Schemes of Arrangement dated 2 August 2021 issued by The Treasury of the Government of the Commonwealth of Australia (the Consultation Paper)

The TMA is a community of professionals dedicated to turnaround and corporate renewal, with a diverse membership group consisting of many disciplines committed to stabilising and revitalising corporate value.

TMA members have had leading roles in many if not all of the 19 creditors' schemes of arrangement that to our collective knowledge have been implemented in Australia since 2008.  It is this deep practical experience that informs this detailed considered submission on how creditors' schemes of arrangement could be improved, and other amendments that could potentially be made to Australia's corporate insolvency regime to further facilitate successful restructuring.

Consistent with our ongoing engagement with Treasury since the onset of COVID-19, the TMA has put in a huge amount of work and thought into our response.  To facilitate an overarching assessment of the use and operation of creditors’ schemes of arrangement as a restructuring tool in Australia, the TMA in this submission seeks to explore a wide range of considerations and recommended reforms.  It draws on input from our directors and members, as well as developments in relevant off shore jurisdictions where similar regimes and reforms have been considered and implemented, including in particular the United Kingdom and Singapore.

The submission:

• responds to the specific questions posed, primarily directed to whether there should be an automatic moratorium in relation to a creditors' scheme of arrangement;
• addresses in detail a suite of potential reforms that TMA considers would improve the efficiency and effectiveness of creditors’ schemes of arrangement overall and which the TMA recommends; and
• discusses other possible reforms including the introduction of a general debtor-in-possession moratorium regime or a priority rescue financing regime. Whilst the TMA considers these potential reforms to be important issues, and worthy of consideration, they involve complex policy and legal issues that need further consideration. Such reforms would also have significantly broader application than just to the creditors’ schemes of arrangement procedure (which are used only by a small number of companies). The TMA therefore considers that it would be inappropriate to “bolt on” such regimes to any reforms concerning creditors’ schemes of arrangement. Instead, the TMA suggests that these reforms require careful further consideration in a broader context as part of a holistic reform of Australia’s restructuring and insolvency laws informed by international experience.

The core TMA team that has worked on the submission are as follows:

• Paul Apathy, TMA Australia Director (Partner, Herbert Smith Freehills)
• Angus Dick (Solicitor, Herbert Smith Freehills)
• Jennifer Ball, TMA Australia Director (Partner, Clayton Utz)
• Alinta Kemeny (Partner, Ashurst)
• Maria O'Brien, TMA Australia President (Partner, Baker McKenzie)

The TMA also warmly thanks Andrew Rich, Natasha McHattan, William Chew, Mitchell Brunker and Stephanie Rowell (all of Herbert Smith Freehills), Grace Lancaster and Lachlan Patey (of Clayton Utz) and Bernice Chen and Alasdair Huggett (of Ashurst) for their significant assistance in considering the matters raised by the Consultation Paper and preparing the TMA's submissions.

Sincerely,

Maria O'Brien
TMA Australia President
Tel: +61 402 127 738

TMAAustraliaPresident@turnaround.org.au