*This information is accurate as of 9.00 am Wednesday 25 March 2020 and is subject to change as this situation evolves.

A tenant's solvency, or its risk of insolvency, is not a novel concern for landlords and tenants alike. But the unprecedented COVID-19 pandemic is putting corporate tenant solvency risk into the hot spotlight arguably like never before, and for good reason.

The German federal government is currently preparing new legislation to reduce the economic fallout from the COVID-19 pandemic. This news alert deals with the proposed changes to the insolvency and restructuring related German regulations.

The Coronavirus Economic Response Package Omnibus Bill 2020 (Coronavirus Response Bill) was passed on 23 March 2020 and received Royal Assent on 24 March 2020 following the Federal Government’s announcements made between 12 and 22 March 2020 of its economic response to the spread of the coronavirus pandemic.

The Coronavirus Response Bill provides, amongst other legislative amendments, for temporary changes of 6 months’ duration to Australian insolvency and corporations laws to assist in managing the sudden economic shock resulting from COVID-19.

In an unprecedented move the Federal Government has announced temporary changes to some aspects of existing insolvency laws as part of the plan to try and keep businesses operating during this unique health crisis time.

Insolvent Trading

“In this world nothing can be said to be certain, except death and taxes.” - Benjamin Franklin

Summary and Key Takeaways

In its recent decision in the ongoing Solar Shop litigation,[1] the Full Federal Court established two key principles which will have significant ongoing implications for the conduct of unfair preference claims:

THE DISPUTE

In Carrello,^[1] the Federal Court granted a warrant under section 530C of the Corporations Act 2001 (Cth) (the Act) allowing the liquidator of Drilling Australia Pty Ltd (the Company) to search and seize property, books and records located in storage containers belonging to the Company.

The Federal Court has considered whether a deed of company arrangement (DoCA) binds a regulator. The case involved an application by the Fair Work Ombudsman (FWO) for leave to proceed against a company in liquidation. The Court rejected the company’s argument that the FWO’s claims were extinguished by the DoCA and granted the FWO leave to pursue the claim. The outcome of the proceedings may impact the types of, and circumstances in which, claims by a regulator will not be extinguished by a DoCA.