On 7 September 2020, the federal government announced that the temporary changes to the creditors' statutory demand and insolvent trading laws have been extended to 31 December 2020.
Key takeouts
In March 2020, the Commonwealth Government's early responses to the economic consequences of the COVID-19 included temporarily suspending and changing important elements of Australia's insolvency laws. These temporary changes were due to expire on 25 September 2020. The government has now announced that this period will be extended to 31 December 2020.
The Government has implemented significant temporary measures to ensure that our insolvency laws and processes do not expose companies and individuals to undue risk. This will hopefully avoid a potentially unprecedented wave of insolvencies.
Key takeouts
The Government announced a six month suspension of insolvent trading laws.
The relevant debts will still be due and payable by the company in the normal way.
Egregious cases of dishonesty and fraud will still be subject to criminal penalties.
The Federal Budget update focused on Australia's economic position and the impact of the Government's response to COVID-19 and the 2019 – 20 Bushfires. Though no new measures were specifically announced, there were some additional items for certain existing programmes.
Key forecasted Budget figures
The Federal Court of Australia has recently exercised its powers to:
The economic impacts of COVID-19 are unexpected and significant. While the Australian Government has announced a number of temporary reforms to address these impacts, there remains risk for directors of companies that are unable to pay their debts as and when they are due.
The Government has announced significant temporary measures to ensure that our insolvency laws and processes do not expose companies and individuals to undue risk. This will hopefully avoid a potentially unprecedented wave of insolvencies.
Key takeouts
The Government announced a six month suspension of insolvent trading laws.
The relevant debts will still be due and payable by the company in the normal way.
The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 was passed by both houses of Parliament on 5 February 2020, with an amendment made by the Senate to review the operation and effectiveness of the legislation after five years accepted by the House of Representatives.
There is no doubt Australia has done well in its response to the COVID-19 pandemic. Many companies and individuals have been able to obtain some economic relief through a range of Government policies and initiatives, and some generous concessions in relation to financing arrangements, which may have otherwise crippled some businesses.
In this technical update we discuss several points of principle from the recent High Court decision in Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth [2019] HCA 20 (Carter).
On 19 June 2019, the High Court delivered its much anticipated decision in Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth [2019] HCA 20.