The Turnbull Government is committed to promoting a culture of entrepreneurship and innovation to help drive economic growth, investment and local jobs.
The Government today released for public consultation draft regulations and a draft declaration to support the stay on enforcement of ipso facto clauses against relevant entities, which was part of the insolvency law reforms passed in 2017.
The ipso facto stay applies to clauses which allow a party to enforce a right, and terminate or amend a contract, when a company has entered into a formal insolvency regardless of the counterparty's continued performance of its obligations under the contract.
These reforms promote business recovery and restructuring by assisting viable but financially distressed companies to continue to operate and salvage the remaining value of the business, increasing the likelihood of selling the business as a going concern.
The reforms allow for certain contracts or contractual rights to be excluded from being subject to the ipso facto stay, which are the subject of these draft regulations and declaration.
"These exemptions recognise that sometimes staying the operation of the ipso facto clauses is either unnecessary or undesirable; for example, where there is an established market mechanism already in place and the ipso facto stay would significantly disrupt those markets, or where staying them would upset the operation of other domestic or international laws," said the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP.
The regulations and declaration will be made prior to the commencement of the primary legislation on 1 July 2018.
Comments on the draft regulations and declaration close on 11 May 2018. The Government invites stakeholders to provide their feedback on the Treasury website.