On 28 September 2022, the Federal Government, through the Parliamentary Joint Committee on Corporations and Financial Services (PJC), began an inquiry into corporate insolvency in Australia.

The announcement follows calls from industry for a ‘root and branch’ review of corporate insolvency law in Australia.

Submissions are open until 30 November 2022 and the PJC intends to table a report to Parliament by 30 May 2023.

When COVID-19 hit Australia in 2020, there were widespread fears about the economic impact of the health crisis, with a predicted avalanche of insolvencies. Many of us greeted 2021 with optimism, hoping for the world to open up as we adjusted to the ‘new normal’. Instead, the virulent Delta strain and snap state lockdowns are keeping the country on edge. While the health crisis continues, the economic crash has been largely avoided.

In another move to protect small business owners, the Federal Government has permanently raised the minimum debt required to serve a statutory demand from $2,000 to $4,000, effective today.

The increase was introduced by the Corporations Amendment (Statutory Minimum) Regulations 2021 (Cth) (Regulations). The new threshold applies to all statutory demands served on or after 1 July 2021. The 21-day period to comply with a statutory demand remains unchanged.

The recent weeks have seen a number of major corporates enter voluntary administration, including Virgin Australia, Techfront Australia, Collette by Collette Hayman and Carriageworks Sydney, as a result of pre-existing distressed financial positions that were exacerbated by the consequences of the COVID-19 pandemic. The uncertainty that COVID-19 has brought, particularly the restriction on gatherings and the shutdown of non-essential services, created challenges for administrators looking to restructure businesses and maximise returns for creditors.

In the decision of Goyal ^[1] handed down on 7 April 2020, Justice Markovic of the Federal Court has given approval to liquidators to enter into a litigation funding agreement under section 477(2B) of the Corporations Act 2001 (Cth).

In what has been Australia’s largest corporate scalp in the wake of the COVID-19 pandemic, Virgin Australia has appointed partners from Deloitte as voluntary administrators. The decision to appoint administrators reportedly arose from the Federal government’s refusal to inject $1.4b as part of a recapitalisation proposal.

An edited version of this article first appeared in Smart Company. By Special Counsel Katherine Payne and partners Mark Petrucco and

The impact of COVID-19 on businesses will undoubtedly require directors to consider formal restructuring and insolvency options, including the appointment of administrators. Administrators are faced with the challenge of assessing a company’s options and forming a recommendation in an era of high market uncertainty. Both proposing a holding Deed of Company Arrangement (DOCA) and extending the convening period are being discussed as options to provide administrators with more time to undertake these tasks. In this article we consider the scope and limitations of each strategy.

The Federal Government has announced a package of changes to Australian insolvency and bankruptcy laws to provide some relief to businesses and individuals who may face financial distress from the economic impacts of the current health crisis.

The package is expressed to provide a safety net to ensure that when the crisis has passed, profitable and viable businesses can resume normal operations. This is in the form of changes to the Corporations Act to provide temporary relief to assist companies to manage through the current economic climate.

A new 'safe harbour' regime was implemented in September 2017 to provide directors who were trying to save a business with protection from future insolvent trading claims. No one could have predicted how important that regime is about to become. Given the escalating stress that is being placed on businesses because of COVID-19, many otherwise successful businesses may risk meeting the definition of insolvency.