Virgin gets some good news! The Federal Court in the first significant legal case arising out of the Virgin collapse has again highlighted the need for flexibility in the application of insolvency laws during the COVID-19 crisis

With the proactive changes announced over the weekend by Treasurer Josh Frydenberg to the Corporations Act and the country’s insolvency laws, Australian businesses (and in particular small businesses) have been extended a lifeline for, at least, the next 6 months.

In short, the main changes are:

In recent years, unfortunately, illegal phoenix activity has become increasingly prevalent within Australia’s commercial landscape.

Despite its significant adverse effect on the nation’s economy, Australia’s statutory corporate insolvency laws have, to date, failed to adequately let alone comprehensively address, or even define, phoenix activity, or deter it.

The Federal Court, in the second significant case arising out of the Virgin collapse, has made extraordinary limited recourse and limited liability orders on application by the Administrators.