I was pleased to have presented some ideas on ‘filtering mechanisms’ for corporate restructuring at the annual insolvency academics network (IAN) gathering at Sydney Law School on 2 December 2025. IAN comprises eminent academic and professional colleagues from Australia, New Zealand and Asia.
My talk followed up from my presentation on the conflict between insolvent restructuring and competition policy which I gave at the IAN session in Brisbane in 2024, then the Sydney Law School panel session on 30 April 2025 asking “whether insolvent restructuring has gone too far”, chaired by Richard Fisher AM and reported by Dr Arthur Emmett, followed by my presentation at the INSOL Academics Colloquium in Barcelona in May. See also my The interaction of insolvency law and market competition (2025) 9(5) INSLB 102.
Armed with much feedback from those sessions, my IAN presentation took the next step of offering ideas for stronger legislative “filters”[1] to address the tension between competition policy and restructuring.
These extend to reframing the objects of Part 5.3A beyond having the company simply “continue in existence”, requiring a broader scope of assessment by the administrator, consulting beyond creditors, and requiring forward accountability and reporting. Reform should also extend to ameliorating the liquidation process.
My view at least provisionally is that the access to restructuring generally is set too low allowing too much intrusion upon competitive market principles.
Late views
Prompted by my pre-IAN story as to a dialogue between an insolvency lawyer and an economist, A lawyer and an economist walk into a bar…. – Murrays Legal – two very useful comments came through.
One, from Dr Garry Hamilton, is so insightful as to be set out in full in a following comment.
The second, was an alert to an excellent ‘left-field’ article that critically questions, and rejects, the many different justifications for business rescue procedures – an “optimistic hodgepodge” – a “recipe for all ailments” – a “garbage can” model of ideas.[2]
Rejecting business rescue culture
The (Implicit) Dogmas of Business Rescue Culture [3] challenges what the authors – Verdoes and Verweij – describe as the “(implicit) dogmas of the current trend towards a business rescue culture” within Europe, a trend which “risks becoming an end in itself”.
The current business rescue culture assumes that
“a firm is an entity that must survive and will create value indefinitely and, accordingly, deserves a second chance”.
But this is despite the fact that
“the ability to create value and therefore the viability of a firm are the outcome of an uncertain economic process”,
that is, the trial and error of capitalism such that failure is a normal and essential outcome.
The implicit assumptions of the current business rescue culture contradict the accelerating destructive forces of capitalism such that the culture has become an anachronism. Instead of focusing on the specific micro-level of the firm, insolvency regimes should
“aim to provide a solution at the higher meso-level”.
The authors question the many different justifications for business rescue procedures – preserving viable enterprises; supporting entrepreneurship and competition; reducing the impact of a financial crisis; preserving jobs and so on.
As to competition,
“continuing an insolvent business could hamper competition and is insolvency not simply the result and consequence of competition? Business rescue is thus an indirect way of subsidizing insolvent firms and preventing the inevitable. Preservation of jobs occurs when a company is continued, but at what cost? Keeping a firm in business for employment purposes is neither rational nor a sound economic policy”.
They ask the fundamental question of
“why should a firm live forever?” [A firm] can be considered a tool, a machine that eventually is worn out”.
Organizations ought only last until their functional utility is exhausted which is how business corporations were originally conceived.
The authors’ main conclusion is that
“changed, failed, and dissolved businesses are the essence of capitalism and should be considered reasons for not interfering and facilitating business rescue. The firm is merely a … vehicle or interactor shielded by corporate law. … Disappearance is therefore a normal, necessary, and inevitable consequence that in principle should not be countered by active business rescue procedures”.
This is in particular the case given the current trend of intensified competition and accelerated rates of innovation.
The authors’ arguments mirror but go further than those in the EU criticising too sympathetic an approach to failing companies arising from what has been pejoratively called ‘restructuring euphoria’.[4]
Comment
There is no academic or policy debate on these issues in Australia. Nevertheless, the purpose of insolvent restructuring, and its limits, would be something to be addressed in any comprehensive review of the insolvency system as recommended by the 2023 PJC Report.
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[1] See Viability in Corporate Debt Restructuring, Lydia Tsioli, Ch 1, Edward Elgar, 2025.
[2] A “garbage can model in which problems, solutions, techniques, and preferences circle, and are fluid; solutions are in search of different problems”: see Michael Cohen, James March, and Johan Olsen, “A Garbage Can Model of Organizational Choice” (1972) 17(1) Administrative Science Quarterly 1.
[3] Tim Verdoes and Anthon Verweij, (2018) 27 Int. Insolv. Rev. 398–421.
[4] See my The interaction of insolvency law and market competition (2025) 9(5) INSLB 102. Also, Pushing the Boundaries between Competition and Insolvency Law: Prepacking in the UK by Matthijs Van Schadewijk, (2017) 5 NIBLeJ 2; and Competition law versus insolvency law: when legal doctrines clash, CG Paulus, (2013) 18 Unif. L. Rev. 65–77.
