The torrid pace of bankruptcy filings by U.S. businesses has ebbs and flows, but the tide is not receding. The economy continues to struggle under the weight of the COVID-19 pandemic.

There has not been any substantial change in the fundamentals of the business cycle and Washington has been unable to produce another round of stimuli. So, we need to be careful about drawing conclusions from any short term variance in the rate of bankruptcy filings.

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

Since the end of the first quarter of 2020, bankruptcy professionals have been planning for a substantial increase in business bankruptcies. The newest statistics tell us that the wait is over. These bankruptcy filings follow the sustained economic contraction rooted in the COVID pandemic. But it would be too simplistic to say that COVID is the sole cause of this trend. Most of the businesses that have filed faced other challenges, such as heavy debt burdens, deteriorating markets or strategic missteps.

The number of so-called mega-bankruptcies filed during the first half of the year tells only part of the story. The pain is not just at the top, but spreads across multiple sectors of the economy. Overall, business bankruptcy filings are 30% higher than they have been at any time during the last 5 years. And, with attempts to re-start the economy already sputtering, the news during the second half could be worse.

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).

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