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

During the COVID-19 crisis, many companies are facing unexpected financial distress, and taking steps to stabilise their business and bolster their finances.

Many directors will not have experienced these issues before, and should be aware of how their duties are impacted when the company is in financial distress.

This guide has been prepared on the basis of Hong Kong law principles. Many of the principles will also be applicable to other common law jurisdictions.

How are companies responding to the current crisis?

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?

This week’s TGIF considers the Coronavirus Economic Response Package Omnibus Act 2020, which was passed in response to the economic impact of the coronavirus. Amongst other things, the Act makes significant changes to creditor’s statutory demands and insolvent trading laws.

The Act

This week’s TGIF considers a recent application to the Federal Court by liquidators of the WDS Group for a pooling order.

What happened?

This case concerned the WDS Group of companies.

WDS Limited (WDS) was a publicly listed company on the ASX with 11 wholly owned subsidiaries (together, the WDS Group).

This week’s TGIF considers the recent case of In the matter of Newheadspace Pty Limited (in liq) [2020] NSWSC 173, where the Supreme Court of New South Wales set aside a liquidator’s examination summonses on the grounds of an abuse of process and failure to satisfy s 596B of the Corporations Act 2001 (Cth).

What happened?

During the second half of 2019, it was generally accepted that the US/China trade war was the most likely macroeconomic event that would precipitate a global slowdown. Even then, given the enormous amount of ‘dry powder’ capital that was available in the market, the downturn, if any, was expected to be mild.

This week’s TGIF examines In the matter of Bytecan Pty Limited (in liquidation) [2019] NSWSC 1910, in which the Supreme Court of New South Wales considered the scope of the advantage to an indemnifying creditor available under section 564.

The facts

During the second half of 2019, it was generally accepted that the US/China trade war was the most likely macroeconomic event that would precipitate a global slowdown. Even then, given the enormous amount of ‘dry powder’ capital that was available in the market, the downturn, if any, was expected to be mild.