The Federal Government will extend the temporary relief measures for financially distressed individuals and businesses to 31 December 2020.
The measures include:
1. The period within which a statutory demand must be complied is extended from 21 days to 6 months.
2. The minimum amount for a statutory demand is $20,000
3. The period within which a bankruptcy notice must be complied is extended from 21 days to 6 months
4. The minimum amount for a bankruptcy notice is $20,000
In March, we reported that, as part of a suite of legislative and economic responses to COVID-19 the Commonwealth Government had announced a range of temporary amendments to certain insolvency laws. The amendments were aimed at temporarily amending insolvency laws, affecting in turn corporate governance, and directors’ duties.
On 7 September 2020, the federal government announced that the temporary changes to the creditors' statutory demand and insolvent trading laws have been extended to 31 December 2020.
Key takeouts
In March 2020, the Commonwealth Government's early responses to the economic consequences of the COVID-19 included temporarily suspending and changing important elements of Australia's insolvency laws. These temporary changes were due to expire on 25 September 2020. The government has now announced that this period will be extended to 31 December 2020.
The Government has implemented significant temporary measures to ensure that our insolvency laws and processes do not expose companies and individuals to undue risk. This will hopefully avoid a potentially unprecedented wave of insolvencies.
Key takeouts
The Government announced a six month suspension of insolvent trading laws.
The relevant debts will still be due and payable by the company in the normal way.
Egregious cases of dishonesty and fraud will still be subject to criminal penalties.
Following the administration of Virgin Australia the lessors of four engines that were leased to Virgin served notice requiring delivery up of the engines to a nominated address in the USA. The administrators argued that their obligations to the lessors were met if they made the engines available for delivery up in Australia.
This week’s TGIF examines a decision of the Supreme Court of Victoria in which an unfair preference claim was defended on the basis that the liquidators had been invalidly appointed and lacked standing to continue the proceeding.
Key takeaways
The Virgin Airlines insolvency has shed new light upon aircraft repossession procedure under the Cape Town Convention.
In Wells Fargo Trust Company, National Association (trustee) v VB Leaseco Pty Ltd (administrators appointed) [2020] FCA 1269 (3 September 2020), Justice Middleton in the Federal Court of Australia, decided two issues:
In March 2020, the Australian Government introduced new measures to relax the laws relating to insolvency and bankruptcy to assist businesses and individuals who may be facing financial distress.
Today, the Federal Government confirmed that these protections will now remain in force until 31 December 2020. We summarise the safeguards below:
The Australian Federal Government has announced the temporary amendments to insolvency and corporations laws will be extended until 31 December 2020 in light of the continuing challenges of COVID-19.
In brief
On 14 May 2015, Australia acceded to the Convention on International Interests in Mobile Equipment (“Cape Town Convention”) and the Protocol to the Cape Town Convention (“Cape Town Protocol”). In particular, for insolvency related proceedings, Australia adopted what is known as “Alternative A” in aviation industry speak. The Cape Town Convention became effective as Australian law on 1 September 2015 and applies to the relevant aviation leasing and financing transitions entered into after that date.