The Australian Federal Government has announced significant insolvency law reforms that will affect small businesses with liabilities of less than $1 million. The reforms are expected to commence on 1 January 2021 and will introduce, among other measures, a new debt restructuring process and liquidation pathway for small businesses which the Government intends to be simpler, more flexible and more efficient than existing processes.

In brief

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 4 June 2020, a draft of The Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 was provided to the Public Bill Committee. The Regulations are due to come into force on 1 December 2020.

The draft Regulations set out the debts due to HMRC that will have ‘secondary’ preferential status in insolvencies from 1 December 2020. They are debts in respect of PAYE income tax, employee NICs, construction industry scheme deductions and student loan repayments. VAT debts are to be treated in the same way, though are not covered by these draft Regulations.

The Australian Federal Government has now passed temporary amendments to insolvency and corporations laws in light of the challenges COVID-19 poses to many otherwise profitable and viable businesses.

The Australian Federal Government has announced today (22 March 2020) that it intends to make temporary amendments to insolvency and corporations laws in light of the challenges COVID-19 poses to many otherwise profitable and viable businesses.

In particular, the government intends to relieve directors from the risk of personal liability for insolvent trading, where the debts are incurred in the ordinary course of business.

The Australian Federal Government has announced today (22 March 2020) that it intends to make temporary amendments to insolvency and corporations laws in light of the challenges COVID-19 poses to many otherwise profitable and viable businesses.

In particular, the government intends to relieve directors from the risk of personal liability for insolvent trading, where the debts are incurred in the ordinary course of business.

On 22 August 2019, the Federal Court of Australia (FCA) held that it could make a request to the New Zealand High Court (NZHC) that there be a joint hearing of those courts in respect of applications relating to the pooling of various funds held by companies subject to Australian and New Zealand liquidations, respectively.

Such a ‘letter of request’ could be issued by the FCA to a foreign court in the context of an Australian insolvency process pursuant to section 581 of the Corporations Act 2001 (Cth) (Corporations Act).

On 26 February 2019, HMRC launched a consultation entitled “Protecting your tax in insolvency”, on the government’s proposal to make HMRC a secondary preferential creditor for taxes paid by employees and customers (the new powers are contained in the proposed Finance Bill 2019-20).

In Swiss Cosmeceutics (Asia) Ltd [2019] HKCFI 336, Mr Justice Harris of the Hong Kong Court of First Instance declined to wind up a company despite it failing to establish a bona fide defence on substantial grounds. Mr Justice Harris commented on the difficulties presented by sporadic record keeping, and reiterated the principle that the burden of proof lies with the company to demonstrate a bona fide defence on substantial grounds, despite the existence of anomalies in the petitioner’s claim.

Facts

In a highly international cross-border restructuring, the High Court of Hong Kong has refused to assist the New York-based Chapter 11 trustee of a Singaporean subsidiary of the Cayman-incorporated Peruvian business China Fishery Group (“CFG”).