The Australian chapter of GRR’s Asia-Pacific Restructuring Review 2021, authored by Herbert Smith Freehills, is now available and reproduced below.

This latest edition covers major Australian legislative developments, transactions and case law relating to restructuring and insolvency in Australia over the past 12 months including:

Legislation

• Temporary COVID-19 insolvency law amendments
• Anti-phoenixing amendments to the Corporations Act

Key restructurings

On 10 December 2020, the Corporations Amendment (Corporate Insolvency Reforms) Bill 2020 (Cth) passed both houses of parliament (Insolvency ReformAct). The substantive provisions of the Bill commence from 1 January 2021, coinciding with the end of the current temporary insolvency protections which were put in place by the federal parliament in March 2020 to protect businesses facing financial distress caused by COVID-19.

Insolvency protections expiring on 31 December 2020

In brief

The new small business insolvency reforms enacted by the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth) (Corporations Amendment Act) - which inserts a new Part 5.3B into the Corporations Act 2001 (Cth) (Corporations Act) - are due to come into effect on 1 January 2021.

In brief

The new small business insolvency reforms enacted by the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Corporations Amendment Act) - which inserts a new Part 5.3B into the Corporations Act 2001 (Cth) (Corporations Act) - are due to come into effect on 1 January 2021.

Companies post-restructuring are not subject to the rules protecting creditors of insolvent companies in section 588FL of the Corporations Act 2001.

This week’s TGIF examines the risks of not complying with the strict rules for serving an application to set aside a statutory demand interstate, and whether a demand that mis-states the extended six-month period to comply will be set aside.

Key takeaways

Changes to Australia’s insolvency framework proposed by the Corporations Amendment (Corporate Insolvency Reforms) Bill 2020 (Cth) have been passed by Parliament and will be available for eligible small businesses from 1 January 2021. Our recent article addressing the proposed Bill can be viewed here.

Introduction

If in your position as director you allow your company to operate while insolvent and unable to pay debts, you could be liable to serious penalties.

The Australian Securities and Investments Commission (ASIC) outlines key considerations for directors whose companies are in financial difficulty or are insolvent.

Am I a director?

This week’s TGIF looks at recent litigation involving Henclo Investments Pty Ltd, where the NSW Supreme Court refused an application to wind up a company on the basis that an outstanding debt alone is insufficient to show insolvency.

Key takeaways