AUSTRALIA Law and Practice Contributed by: Alastair Gourlay, Lewis Grimm, Joanne Dwyer and Kathryn Sutherland-Smith, Jones Day
6. Enforcement 6.1 Enforcement of Collateral by Non- Bank Secured Lenders Australia is a creditor-friendly jurisdiction that affords strong prospects of recovery to secured creditors in an insolvency scenario. Private cred - it providers are not treated differently from banks under Australian insolvency laws. A secured creditor will typically enforce its collateral under the finance documents through the contractual appointment of a receiver, who realises the value of the collateral for the sole benefit of the secured creditor. This typically involves the sale of the collateral following an expedited marketing pro - cess, but a receiver and manager can also trade on a business for a period of time if there is a commercial imperative to do so. Where a lender has security over substantially all of the assets of a business, the lender will typically appoint a receiver to the relevant operating entities or, if available under the collateral package, a holding company that controls all of them. Secured creditors may also take control of secured property as mortgagee in possession or pursue court proceedings, but receivership is generally more expedient and also reduces the risk of lender liability in respect of the enforce - ment process. The costs of the receivership (including profes - sional fees) are usually recoverable from the proceeds of the collateral, though the secured creditor is required to indemnify the receiver at the outset of the appointment. 6.2 Foreign Law and Jurisdiction Choice of governing law and jurisdiction clauses are generally upheld unless they are contrary to Australian law, public policy, or if there is cause for the court to disregard the relevant provision.
Waivers of immunity are also generally upheld by Australian courts unless they contravene the Foreign States Immunities Act 1985 (Cth). 6.3 Foreign Court Judgments Foreign judgments relating to money orders and other specified relief from certain countries are registerable in Australia under the Foreign Judg - ment Act 1991 (Cth) where the foreign judgment is final, conclusive, and less than six years old, among other requirements. Foreign judgments of other courts may also be recognised under common law. Arbitral awards made in countries that are party to the United Nations Convention on the Rec - ognition and Enforcement of Arbitration Awards 1958 (ie, the New York Convention) are also readily enforceable in Australia. 6.4 A Foreign Private Credit Lender’s Ability to Enforce Its Rights Australian insolvency laws do not discriminate between domestic and foreign lenders. How - ever, where a foreign lender seeks to credit bid for its collateral, the acquisition may require approval from FIRB. Funds that regularly pur - sue loan-to-own strategies may wish to seek an exemption certificate from FIRB prior to com - mencing a program of lending transactions to reduce their regulatory burden 6.5 Timing and Cost of Enforcement Receivers are typically privately appointed under the terms of the finance documents without court involvement. This means that an appointment can be made immediately once the lender’s right to enforce its security has been triggered. The cost and timing of the process to realise the col - lateral depends on various factors, including: • the nature and extent of the collateral;
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