Asia: Insolvency/Bankruptcy/Re-Structuring

Cathro and Partners' expanded Cathro Clarity dashboard reveals diverging trends in Australian insolvency: corporate appointments have nearly tripled since FY22 while personal bankruptcies rose only 15%, with debt agreements now accounting for 43% of personal insolvencies. The data exposes striking industry patterns, particularly healthcare's disproportionate representation in personal bankruptcies compared to corporate failures, and construction's dominance across both categories.

Lenders increasingly evaluate recovery across every available layer of credit support rather than treating corporate insolvency as a standalone proceeding.

Corporate demergers have long served as an effective mechanism for business reorganisation, enabling companies to segregate business verticals, streamline operations and facilitate strategic investments in a tax-efficient manner. It is not uncommon for group restructurings to involve transfer of an undertaking to a wholly owned subsidiary (“WOS”) while the consideration is discharged through issuance of shares by its holding company—a structure that has, on several occasions, received approval under the Companies Act, 2013.

The National Company Law Tribunal's Kochi Bench examined a lending arrangement involving upfront interest deductions, high effective returns, and multiple post-dated cheques, questioning whether such 'Shylockian' transactions could legitimately invoke insolvency proceedings.

Cathro and Partners' expanded Cathro Clarity dashboard reveals diverging trends in Australian insolvency: corporate appointments have nearly tripled since FY22 while personal bankruptcies rose only 15%, with debt agreements now accounting for 43% of personal insolvencies. The data exposes striking industry patterns, particularly healthcare's disproportionate representation in personal bankruptcies compared to corporate failures, and construction's dominance across both categories.

A Federal Court decision examines whether liquidators can rely on accounting entries alone to pursue debt recovery, or whether suspicious book entries require stronger evidence to overcome a nil balance shown in company records. The case highlights critical evidentiary thresholds for insolvency practitioners when challenging transactions made shortly before liquidation.