Summary

On 23 March 2020, the Federal Parliament passed the Coronavirus Economic Response Package Omnibus Bill 2020 (the COVID Act).

The COVID Act received Royal Assent on 24 March 2020 which amended, amongst other things, the Corporations Act 2001, the Bankruptcy Act 1966 and the Bankruptcy Regulations 1996 to temporarily release directors from a risk of personal liability for insolvent trading, as well as increase the minimum amount and time-frame for both statutory demands and bankruptcy notices.

This week on Wednesday 12 September 2018, the High Court of Australia, by a majority judgment (3:2 Kiefel CJ, Edelman and Gaegler JJ concurring), handed down their decision in Mighty River International Limited v Hughes [2018] HCA 38. The majority of the Court held that holding DOCAs, which are deeds of company arrangement that provide additional time for administrators to undertake their investigations, are consistent with the object of Part 5.3A of the Corporations Act 2001 (Cth) and do not contravene any provision of that Part.

Summary

Parties that withhold from serving a Statement of Claim and then seek an extension of time to do so, without a 'good reason' for an extension being granted, run the risk of the claim not being renewed and being dismissed in its entirety.

This is a lesson learned the hard way by a liquidator in three recent concurrent, interrelated proceedings in the Supreme Court of Queensland.

Background to the claims

Summary

Insolvency practitioners pursuing unfair preference claims should give consideration to a recent Queensland District Court judgment which has endorsed the application of section 553C of the Corporations Act 2001 (Cth) (Act) - which enables an insolvent company and a creditor to set-off their mutual debts against each other - to unfair preference claims.