The Arrium Administration breaks new ground with a novel group DOCA structure

‘Shipping steel, shipping steel . . .
Nobody knows, the way it feels
Caught between Heaven and the Highway
Shipping steel, shipping steel . . .’ ¹

On 7 April 2016, Administrators were appointed to South Australian-based steelmaker and iron ore miner Arrium, which reportedly owed approximately AUD4.3 billion to its lenders, suppliers and staff.  The appointment covered 94 direct and indirect subsidiaries of Arrium Limited (the Arrium Companies), which at the time employed around 8,100 employees and contractors.

The broader Arrium Group also includes the Moly-Cop group, which is located mostly overseas, trading profitably and not subject to the insolvency proceedings.  The Administrators announced on 4 November 2016 that US private equity firm American Industrial Partners had bought Moly-Cop for US1.23 billion (AUD1.6 billion).  The proceeds of the sale will predominantly go to Moly-Cop’s lenders, reducing their debt by about 50%.

The regulatory crackdown on the illegal phoenix

Unscrupulous advisors, unconscionably preying on desperate directors driven by the fear of losing everything, have created a boom in illegal phoenix activity.  The below article, originally published on the McCullough Robertson white collar crime blog, Collared, sheds some light on the illegal phoenix, the gravity of the problem in Australia and considers what is being done to monitor and control the issue. 

‘We didn't start the fire
It was always burning since the world's been turning
We didn't start the fire
No, we didn't light it, but we tried to fight it’[1]

The Illegal Phoenix

Illegal phoenixing is a major problem in corporate Australia.  In this post we consider what illegal phoenix activity is, how the problem is affecting the Australian economy and the recent regulatory crackdown on the issue.

Will a deed of company arrangement be recognised and enforced by US and Canadian courts?

In August I presented on cross-border insolvency at the joint Federal Court of Australia and Law Council of Australia conference on corporations law.  The audience consisted of over 30 Federal Court judges and a range of other experienced corporate and insolvency lawyers.  I decided to present a case study, a major part of which was considering whether a hypothetical deed of company arrangement (DOCA) could be recognised and given the force of law in the US and Canada under their legislation based on the UNCITRAL’s Model Law on Cross-Border Insolvency (Model Law) in order to prevent US based creditors seeking court orders against assets in the US and Canada.  This sparked sufficient interest that I was then asked to present the same paper at the annual conference of the Insolvency and Reconstruction Law Committee of the Law Council of Australia a few weeks ago.  I thought I would share some insights from the paper in this blog.