NATIONAL REPORT FOR AUSTRALIA

This chapter considers the treatment of executory contracts upon the default of a debtor company under Australian law and the main factors behind the most recent reforms in the area. Australia’s treatment of executory contracts in insolvency is subject to recent reform in line with the Australian government’s innovation and reform agenda. The reform brings Australian insolvency laws one step closer to resembling international approaches – such as the approach under the United States’ Chapter 11 Bankruptcy Code. The reform is intended to overcome the negative impact of ipso facto clauses on genuine work-out attempts and restructuring measures. It is difficult to assess the full ramifications of the reform at this time. However, it is clear that ipso facto clauses no longer have the same enforceability in Australian insolvency, and Australian businesses will need to re-evaluate their contractual agreements and how they approach doing business.