The Full Court of the Federal Court of Australia has become the first appellate court among ratifying countries to look directly at the meaning of “give possession” and “giving possession of the aircraft object to the creditor” under the Protocol to the Convention on International Interests in Mobile Equipment (known as the Cape Town Convention) on matters specific to Aircraft Equipment (the Protocol) in the context of an insolvency (the Virgin Australia insolvency) in Wells Fargo Trust Company, National Association (trustee) v VB Leaseco Pty Ltd (admin

The UK has introduced a new restructuring tool, the Restructuring Plan, which when coupled with other provisions of the new law creates the possibility of the management of a company in financial difficulty remaining in control of a process designed to turn the company around as a going concern whilst in many cases having the benefit of a moratorium. Sounds a little like Chapter 11 in the US?

We examine whether the Restructuring Plan will offer aviation companies in the UK (and elsewhere?) a potential route to deal with the difficulties caused by the COVID-19 pandemic.

Insolvency termination clauses in Supply Contracts

What are the potential implications of the new measures in relation to contracts for the supply of goods or services set out in the Corporate Insolvency and Governance Act 2020 (the “Act”) for aircraft lenders, lessors and airlines? In the second of a series of three articles, we consider the new prohibition on suppliers invoking termination clauses (or changing other terms) upon an insolvency or formal restructuring process introduced in the Act.

The new moratorium regime

What are the potential implications of the new moratorium regime set out in the Corporate Insolvency and Governance Act 2020 (the “Act”) for aircraft lenders, lessors and airlines? In the first of a series of three articles, we consider this new law.

Introduction

The concept of winding up does not exclusively apply to insolvent companies. Solvent companies can also be wound up, on the initiation of the company’s directors and shareholders (for example, as part of a corporate reconstruction or to close down non-operating or redundant entities). 

An overview of the two key procedures to effect the dissolution of a solvent Australian company, being Members’ Voluntary Liquidation and Deregistration, is set out below. 

In brief

Even with the fiscal stimulus and other measures taken by the Federal and State governments in Australia, corporate insolvencies are likely to increase in coming months.

Under Australia's insolvency regimes, a distressed company may be subject to voluntary administration, creditor's voluntary winding up or court ordered winding up (collectively, an external administration). Each of these processes raises different issues for the commencement and continuation of court and arbitration proceedings.

In summary

In our previous alert we discussed how Justice Markovic in the Federal Court of Australia had granted the administrators of retailer Colette Group relief from personal liability for rent in respect of 93 stores.  

The economic fallout from the COVID-19 pandemic will leave in its wake a significant increase in commercial chapter 11 filings. Many of these cases will feature extensive litigation involving breach of contract claims, business interruption insurance disputes, and common law causes of action based on novel interpretations of long-standing legal doctrines such as force majeure.

The Australian Federal Court has made orders relieving the administrators of retailer Colette from personal liability for rent in response to the COVID-19 crisis and the current uncertainty in respect of government policy about rent relief for tenants: see

What you need to know

Amendments to the Corporations Act 2001 (Cth) (Corporations Act) to implement the measures announced by Treasurer Josh Frydenberg on Sunday, 22 March 2020 to provide temporary relief for financially distressed businesses due to COVID-19 have now come into effect.

The Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (CERPO Act) amendments were passed by the Parliament on 2 March 2020. They will apply for a 6 month period, but may be extended or have impacts beyond that timeframe.