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As 2024 proved to be a pivotal and dynamic time for the insolvency and restructuring field, a BigLaw partner has detailed the most pertinent proceedings from last year that professionals should pay attention to in order to prepare effectively for the year ahead.
Johnson Winter Slattery (JWS) has published the latest edition of its Insolvency & Restructuring Case Summaries publication, featuring over 50 case summaries to help insolvency practitioners stay ahead of the curve and confidently tackle the challenges of the year ahead.
Key court cases in 2024
Speaking with Lawyers Weekly, Joseph Scarcella, partner and head of restructuring and insolvency at JWS, who helped write the case summaries, highlighted the top court cases of 2024 that insolvency professionals should be aware of due to their significant impact on shaping the voluntary administration regime.
Among the most notable decisions, Scarcella pointed to the NT Port and Marine case, which he described as pivotal in clarifying “the extent to which a court will terminate a security interest in circumstances where the existence or maintenance of that interest may frustrate a viable restructure”.
Additionally, Scarcella identified that the decisions in the Dixon Advisory & Superannuation Services and Pacquola Group have been key decisions that have illustrated the scope of “the court’s powers to vary a deed of company arrangement in the right circumstances”.
Scarcella believes these three decisions will have the most far-reaching impact on the profession “as they demonstrate the court using its extensive powers in a voluntary administration in a commercial commonsense approach to enhance return to creditors and reduce the costs and increase the efficiency of the administration process”.
Biggest developments in 2024
A significant takeaway for the insolvency sector in 2024, as identified by Scarcella, is the sharp rise in external administrators, with it increasing by “almost 40 per cent” compared to the previous year.
Scarcella indicated that the recent surge is fuelled by the ongoing effects of “higher interest rates and costs”.
He also noted that the “lack of abatement on cost of living and costs generally”, along with the “absence of any stimulus and increased ATO activity”, means that all signs are suggesting that formal insolvencies will continue to rise in the upcoming years.
Specific sectors, particularly the hospitality and retail industries, Scarcella explained, have borne the brunt of the economic pressures, with the notable increase in insolvencies primarily “concentrated in the SME sector”.
However, Scarcella has observed that over the past year, the strain and stress are beginning to impact larger companies, which he believes is a trend that could lead to a rise in “insolvency appointment[s]”.
Within the last year, Scarcella has pointed out that there has been a “stark increase in the number of safe harbour mandates for larger corporations”. He explained that the uptick in these mandates highlights the “significant distress in the market”.
How to best prepare for 2025
As the insolvency and restructuring sector is anticipated to keep growing and become an increasingly dynamic practice area, Scarcella has emphasised the need for decisions “to be made quickly and with a strong commercial focus”.
Given that professionals in this field don’t often have “enough time, let alone money” to make decisions with “absolute perfection”, Scarcella noted that they must be prepared to make prompt decisions and exercise sound judgment “for the benefit of creditors”.
He said: “As the number of insolvencies rise, and the extent to which the deficiencies in those insolvencies also increase, the need to act with speed also increases.”
For lawyers in the insolvency and restructuring field to succeed this year, Scarcella stressed that “keeping abreast of the latest decisions” will allow such professionals “to make decisions quickly and with a high degree of confidence that they are acting in the best interests of stakeholders”.
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Grace Robbie
