Vol 18 (2021) - Issue 5

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Outer Space: The New Frontier for Restructuring and Insolvency

Synopsis
Activities in outer space have increased significantly over the last few years. Governments across the globe have launched new space strategies and policies which identify investment in new space law projects, in both the public and private sector, as an important component of future economic growth. This "space economy" is seen as a river of untapped potential.
While outer space activities were traditionally limited to state-based projects, a rapid technological and digital change over the last decade has seen a marked shift towards the commercialisation of space activities and the pursuit of those activities by private sector entities.
Currently, the main commercial outer space activities relate to the use and operation of satellites – satellite television and communications services, as well as satellite imagery and surveillance, and satellite navigation. Indeed, the marked increase in satellite capability and activity from private enterprises globally has caused NASA to express concerns over the level of ‘space junk’ from operational and defunct satellites, as well as other space debris, and the safety risk to people and property in space and on Earth from this so-called ‘orbital graveyard’.
However, there has also been progress in space mining. For example, Russia and the European Space Agency have established a program, PROSPECT, to test resource exploration potential in outer space and to work together to develop new technologies that may be used to extract those resources in future. The Chinese National Space Administration has also successfully collected moon samples under a series of Chang’e lunar missions designed to investigate the potential for a viable commercial resource exploitation program in outer space.
Space mining is expected to be the most significant future growth area in space activity, with the global demand for resources beyond those offered on our own planet Earth.
This immense appetite for increased public and private investment in new activities in outer space, backed by multi-jurisdictional partnerships as well as continuing enhancements in technological capability, will inevitably drive space-related restructuring in coming years as existing resources and technology entities transition their operations towards new investments and activities in outer space. This can be expected to result in continued innovation from businesses, and necessarily will also see an increase in start-up ventures and greater corporate risk-taking – which itself may spark further restructuring and insolvency activity.
The purpose of this article is to explore the intersection between outer space activities and restructuring and insolvency. We outline some of the challenges that may face insolvency practitioners in the context of an appointment to an entity conducting outer space activities, as well as the restructuring opportunities we are likely to see as the pace of global investment in outer space activities continues.