With each extension, the scope of the suspension of the obligation to file for insolvency which was first introduced in March 2020 became more and more limited.

The Australian chapter of GRR’s Asia-Pacific Restructuring Review 2021, authored by Herbert Smith Freehills, is now available and reproduced below.

This latest edition covers major Australian legislative developments, transactions and case law relating to restructuring and insolvency in Australia over the past 12 months including:

Legislation

• Temporary COVID-19 insolvency law amendments
• Anti-phoenixing amendments to the Corporations Act

Key restructurings

We are pleased to announce the publication of the third edition of the Herbert Smith Freehills Guide to Restructuring, Turnaround and Insolvency, Asia Pacific.

Against a backdrop of the COVID-19 pandemic and the resulting economic downturn, we are seeing companies and lenders respond to a new and challenging business environment. The challenges associated with this new environment are further exacerbated as the influencing factors change in nature and intensity.

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

I. Introduction

Due to the current corona crisis and the therewith associated tense economic situation, many managing directors (Geschäftsführer) are faced with the question of a possible, punitive obligation to file for insolvency as well as other duties that must be observed in the context of a crisis.

The following provides an overview of the obligation to file for insolvency, payment prohibitions in a crisis as well as the facilitations introduced under the German COVID-19 legislation.

With unanimous vote, the German Parliament passed the Law to mitigate the consequences of the COVID-19 pandemic in civil, criminal and insolvency law. This new law brings with it several (temporary) changes of law all of which aim at mitigating the consequences of the COVID-19 pandemic in both private and business life. Inter alia, the following provisions have been implemented:

1. Suspension of the obligation to file for insolvency

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.