The nearly $350 billion loan program made available to small businesses by the Coronavirus Aid, Relief, and Economic Security (CARES) Act was tapped out in less than two weeks. In response to this overwhelming demand, on Friday, April 24, 2020, an additional $320 billion was funded into the loan program, and the second round of applications for small businesses requesting these loans will open on Monday, April 27, 2020.

This week’s TGIF considers the decision in Aardwolf Industries LLC v Riad Tayeh [2020] NSWSC 299, in which the Supreme Court of New South Wales refused an application for leave to sue court-appointed liquidators for damages for negligence and misleading and deceptive conduct.

Background

This week’s TGIF considers the decision in Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 472 where the Federal Court made orders absolving the administrators of retailer Colette from personal liability for rent for a two week period, due to the COVID-19 pandemic.

This week’s TGIF examines the recent changes to Australia’s insolvency regime, the potential implications for business and considerations for creditors in light of the impact from COVID-19.

The Australian Government has now passed theCoronavirus Economic Response Package Omnibus Bill 2020. The bill was fast-tracked through both houses of parliament with bipartisan support on 23 March 2020 and makes significant changes to Australia’s insolvency regime over the next six months.

What happened?

We are in unprecedented times. The current COVID-19 pandemic will not only have an impact on the physical health of our country, but the economic health of our country as well. Increased bankruptcy filings are a virtually certainty and this raises concerns of many, including licensors and licensees of intellectual property. What should these parties be thinking about given the coming uptick in bankruptcies?

From the Licensee’s Perspective

Courts struggled last year to find a balance between state-licensed cannabis activity and the federal right to seek bankruptcy protection under the Bankruptcy Code. During 2019, we had the first circuit-level opinion in the bankruptcy/cannabis space that appeared to open the door to bankruptcy courts, albeit slightly. We also had lower court opinions slamming that door shut.

Below, we look at a few of the most important decisions issued throughout 2019 and analyze the current state of the law.

The Ninth Circuit's Garvin Decision

Courts struggled this year to find a balance between state-licensed cannabis activity and the federal right to seek bankruptcy protection under the Bankruptcy Code. During 2019, we had the first circuit-level opinion in the bankruptcy/cannabis space that appeared to open the door to bankruptcy courts, albeit slightly. We also had lower court opinions slamming that door shut. Below, we look at a few of the most important decisions issued throughout 2019 and analyze the current state of the law.

The Ninth Circuit Court of Appeals’ Garvin Decision

In another loss for the cannabis industry, a district court recently affirmed the dismissal of chapter 11 petitions filed by companies that sold product used by both state-licensed marijuana growers and non-marijuana growers. The district court’s decision in Way to Grow, Inc. demonstrates that the door that was opened by the Ninth Circuit in Garvin v. Cook Invs.

This week’s TGIF considers the decision in Dudley (Liquidator) v RGH Construction Fitout & Maintenance Pty Ltd (No 2) [2019] FCA 1355, where the Court exercised its discretion to cure a procedural irregularity in a mothership proceeding.

This week’s TGIF considers the latest chapter in the story of Legend International Holdings Inc, where the Court of Appeal considered whether Legend was insolvent, whether mining tenements held by Legend’s subsidiary constituted ‘readily realisable assets’, and whether various deeds entered into by Legend were void as uncommercial transactions.