Significant emerging factors and trends are increasing pressure on directors. After several years of relative stasis induced by the pandemic (when many businesses were supported by various government initiatives and bank flexibility, whilst also enjoying ATO and creditor patience), there is a distinct whiff of change in the air. This year, we might see a move back to a more ‘normal’, pre-COVID setting. If so, there will be pressures for some, and opportunity for others.

In an environment of interest rate pressure, a cooling economy and global economic uncertainty, corporate insolvencies are a stark reality. The failure of construction companies has become regular news and ASIC recently released insolvency data that shows a marked uptick in Australian insolvencies in general.

The introduction of the ‘ipso facto regime’ in 2018 had a widespread impact on the drafting and application of termination provisions in commercial contracts, casting doubt on the longstanding practice of allowing a right to terminate a contract when another party to the contract becomes insolvent.

After depositors rushed to withdraw funds from Silicon Valley Bank (SVB), on Friday, March 10, 2023, the US bank was closed by the California Department of Financial Protection and Innovation (DFPI), and the Federal Deposit Insurance Corporation (FDIC) was named receiver of the closed bank.

Since 1988, the ‘rule in West Mercia’ – so named after the West Mercia Safetywear v Dodd Court of Appeal case – has been the leading authority for when directors of financially stressed companies are subject to the so-called ‘creditor duty’, namely the duty to consider the interests of the company’s creditors.

As discussed in an earlier post called “Moving Up: Bankruptcy Code Dollar Amounts Will Increase On April 1, 2022,” various dollar amounts in the Bankruptcy Code and related statutory provisions were increased for cases filed on or after today, April 1, 2022.

An official notice from the Judicial Conference of the United States was just published announcing that certain dollar amounts in the Bankruptcy Code will be increased a larger than usual 10.973% this time for new cases filed on or after April 1, 2022.

Each year amendments are made to the Federal Rules of Bankruptcy Procedure, which govern how bankruptcy cases are managed. The amendments address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. The rule amendments are ultimately adopted by the U.S. Supreme Court and technically subject to Congressional disapproval.

After bringing dozens of criminal charges against Paycheck Protection Program loan recipients in recent months, on January 12, the US Department of Justice announced its first civil settlement resolving allegations of PPP loan fraud.

Each year amendments are made to the rules that govern how bankruptcy cases are managed — the Federal Rules of Bankruptcy Procedure. The amendments address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. The rule amendments are ultimately adopted by the U.S. Supreme Court and technically subject to Congressional disapproval.