Statutory demands and bankruptcy notices are powerful tools used by businesses seeking payment. For 6 months they will be much weaker. What options remain?

The Government has announced proposed changes to personal and corporate insolvency laws to provide temporary relief to debtors in connection with compulsory insolvency processes.

Changes to statutory demands and bankruptcy notices

The Victorian Court of Appeal delivered judgment in Re Amerind today and held that the priority regime in the Corporations Act applies to insolvent corporate trustees.

In an important decision for insolvency practitioners, the Victorian Court of Appeal today delivered judgment in Commonwealth of Australia v Byrnes and Hewitt in their capacity as joint and several receivers and managers of Amerind Pty Ltd (Receivers and Managers Appointed) (in liq) & Ors [2018] VSCA 41.

From 1 July 2018, new laws will commence which stay the enforcement of ipso facto clauses that are triggered by certain insolvency events.

What are ipso facto clauses?

An ipso facto clause in a contract allows one party to terminate or modify the operation of a contract upon the occurrence of a specific event. Many commercial contracts contain such clauses which operate to allow one party to terminate a contract only due to the commencement of formal insolvency proceedings.

Australia is on the cusp of implementing various changes to the Bankruptcy Act 2001 (Cth) that will likely increase the number of people voluntarily entering into personal bankruptcy.

The Bankruptcy Amendments (Enterprise Incentives) Bill 2017 was introduced in the Senate on 19 October 2017. The Bill follows from reforms proposed in the National Innovation and Science Agenda (from which the ‘Safe Harbour’ Reforms also originated).[1]