The Treasurer, the Honourable Josh Frydenberg MP, has today announced proposed temporary changes to Australian corporate insolvency laws which will vary the minimum requirements for statutory demands and provide some relief for directors from insolvent trading. These announcements form part of the Australian Government's measures to support otherwise profitable and viable businesses due to the economic impacts of COVID-19.
What a director wanting to enter the safe harbour must do
Directors in Australia have long had a statutory duty to prevent insolvent trading. The duty is engaged where:
Directors of Australian companies face significant personal monetary − and potential criminal and adverse professional - consequences if they allow the company to trade whilst insolvent.
Australian insolvent trading laws are harsher, and more frequently utilised to prosecute directors personally, than in many other jurisdictions including in the US and the UK.
Accordingly, frequent assessment of a company's solvency by its directors is crucial, particularly in financially difficult times, as are active steps to address any potential insolvency.
These key action points take into account the UK Pensions Regulator's recent statement on COVID-19. Trustees and employers should continue to monitor further updates from the Regulator.
Defined benefit (DB) arrangements
On 30 January 2020, the World Health Organization declared that the coronavirus outbreak constituted a public health emergency of international concern. The PRC and Hong Kong have been at the forefront of the coronavirus outbreak.
United States Bankruptcy Court, D. Maryland. March 02, 2020
The plaintiffs were various entities who filed for bankruptcy protection under Chapter 11 in 2001. Their bankruptcy confirmation order set a bar date for the filing of claims by creditors against the entities. Nearly 16 years later, asbestos claimants filed claims for exposure to asbestos in Pennsylvania. The plaintiffs then filed suit against the asbestos claimants as an adversarial bankruptcy proceeding. Motions for summary judgment were filed by both sides.
On 30 January 2020, the World Health Organization declared that the coronavirus outbreak constituted a public health emergency of international concern. The PRC and Hong Kong have been at the forefront of the coronavirus outbreak.
United States Court of Appeals, Second Circuit, February 19, 2020
United States Court of Appeals Third Circuit, February 18 2020
DELAWARE – The appellants are latent asbestos claimants who did not file by the bar date set by Chapter 11 bankruptcy but who were subsequently diagnosed with mesothelioma. The appellee is Energy Future Holdings Corporation (EFH), which was a holding company for several energy properties. Those subsidiaries became defunct long ago as a result of asbestos litigation. EFH also filed for bankruptcy as a result of vast sums of money owed to asbestos debtors. The reorganization plan called for a notice period to latent claimants followed by a subsequent bar date for claims.