The Australian Government has announced that the operation of temporary COVID-19 relief measures for businesses in the hope of aiding distressed companies and preventing further economic breakdown will be extended until 31 December 2020.[1]

In its recent judgment involving the PAS Group of companies[1], the Federal Court held that rent payable by the PAS Group during an extension of the period in which an administrator had been excused from personal liability (Standstill Period) is an expense properly incurred by a ‘relevant authority in carrying on the company’s business’ and is therefore a priority debt under s 556(1)(a) of the Corporations

The Supreme Court of New South Wales has helpfully given guidance to the liquidators of the RCR Tomlinson Group on a number of unsettled questions that have challenged insolvency practitioners (particularly liquidators of construction companies) when assessing whether certain intangible rights and assets are circulating assets.

The questions include:

Short Read:

Despite the law not yet being in force, the High Court has this week granted an unnamed high street retailer an injunction preventing one of its landlord creditors from presenting a winding-up petition against it on the expectation that the restrictions in the Bill will shortly be enacted.

This week, the Federal Court published judgments in three unfair preference claims brought by the liquidators of the Gunns Group. We acted for the liquidators in each proceeding.

Times are changing rapidly with the current flow of Coronavirus measures introduced to support businesses in debt and distress.

We take a look at what creditors can (and can’t) do to help better protect their position.

I’m owed money. What can I do?

Certain recent government measures may impede your ability to take recovery or enforcement action at the present time. The good news is that many avenues remain available.

You cannot (in some cases):

In the current climate, it is expected that thousands of business will enter administration and Administrators will need to assess each administration on its merits to see if it is appropriate to adopt a light touch approach.

As a result of the unprecedented situation that is being faced by businesses due to the Covid-19 pandemic lockdowns there have been many discussions within the insolvency and legal sectors about how best to rescue struggling businesses.

As a creditor, especially during the current Covid-19 crisis, it may be tempting to accept all and any payments from debtors.

Payments that a debtor company makes to you during the period where there is a winding-up petition in place will be a void disposition, under section 127 of the Insolvency Act 1986, unless there is an application to the Court and receipt of what is known as a “validation order,” allowing you to keep the money.

What’s happening in real life?

In a recent decision in the Supreme Court of NSW[1], Rees J set aside a liquidator’s bid to publicly examine two senior officers of the National Rugby League (NRL), finding that examination summonses issued by the liquidator were an abuse of process and the entire liquidation process was a contrivance in order to exert commercial pressure on the NRL.

The changes?

On Saturday, during the Government’s daily Coronavirus update, it was announced that it would shortly legislate to: