COVID-19 presents the greatest challenge a generation of corporate managers will see in their lifetime.

This is not the first time the Australian economy has stared down the barrel of a severe economic downturn, but it is the first time the economic conditions that previously underlined robust business models have evaporated overnight due to a public health crisis.

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.

This week’s TGIF considers a recent application to the Federal Court by liquidators of the WDS Group for a pooling order.

What happened?

This case concerned the WDS Group of companies.

WDS Limited (WDS) was a publicly listed company on the ASX with 11 wholly owned subsidiaries (together, the WDS Group).

As the social and economic disruption caused by coronavirus (COVID-19) continues to rapidly evolve, the boards of Australian companies are facing solvency related issues. These issues extend to the solvency of suppliers and customers, and the potential consequences of the appointment of a voluntary administrator.

This week’s TGIF considers the recent case of In the matter of Newheadspace Pty Limited (in liq) [2020] NSWSC 173, where the Supreme Court of New South Wales set aside a liquidator’s examination summonses on the grounds of an abuse of process and failure to satisfy s 596B of the Corporations Act 2001 (Cth).

What happened?

During the second half of 2019, it was generally accepted that the US/China trade war was the most likely macroeconomic event that would precipitate a global slowdown. Even then, given the enormous amount of ‘dry powder’ capital that was available in the market, the downturn, if any, was expected to be mild.

This week’s TGIF examines In the matter of Bytecan Pty Limited (in liquidation) [2019] NSWSC 1910, in which the Supreme Court of New South Wales considered the scope of the advantage to an indemnifying creditor available under section 564.

The facts

During the second half of 2019, it was generally accepted that the US/China trade war was the most likely macroeconomic event that would precipitate a global slowdown. Even then, given the enormous amount of ‘dry powder’ capital that was available in the market, the downturn, if any, was expected to be mild.

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 Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 (Cth) (Amending Act) passed into law on 17 February 2020, over a year after it was first introduced to Parliament.   

Placing phoenix activity firmly in its crosshairs, the Amending Act introduces long anticipated reforms to Australia’s efforts to curb phoenix activity.  

Background