The Good, The Bad and The Ugly: Pre-pack Arrangements and Phoenix Activity for SMEs

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Snapshot

  • This article considers the line between legal pre-pack arrangements and illegal phoenix activity for insolvent small-to- medium sized enterprises (SMEs).
  • Pre-packs (also called pre- positioned arrangements) now have the limited support of insolvency practitioners (through the Australian Restructuring Insolvency & Turnaround Association) but this area of the law is hindered by a lack of targeted legislation.
  • The case of ASIC v Franklin, (liquidator), in the matter of Walton Contructions Pty Ltd [2014] FCAFC 85 shows that a complex turnaround that involves a referral relationship between professional advisers and insolvency practitioners can be problematic.

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Published in: Law Society Journal, April 2015