Pursuant to regulations which commenced on 22 September 2020, the Australian Government has extended the temporary insolvency relief measures (which came into force on 25 March 2020 in response to the coronavirus (COVID-19) pandemic) to 31 December 2020.
In brief
The Treasurer has today announced two new corporate insolvency regimes:
- a new "debtor in possession" restructuring plan process; and
- a new simplified liquidation process,
due to commence from 1 January 2021 and available to companies with liabilities of less than A$1m.
Restructuring Plan Process
The new restructuring plan process involves:
In this edition of Gilbert + Tobin's Corporate Advisory Update, we focus on key legal developments over the last month which are particularly relevant to in-house counsel.
Temporary COVID-19 Corporations Act relief to allow virtual company meetings and electronic and split execution extended to 22 March 2021
This is an update to our previous insight article Major short-term changes to Australian insolvency regime which discussed the introduction of Parts 2 and 3 of Schedule 12 (Temporary Measures) to the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (Act) on 23 March 2020.
In ACN 004 410 833 Ltd (formerly Arrium Limited) (in liq) v Michael Thomas Walton [2020] NSWCA 157, the NSW Court of Appeal clarified the scope of examination and production orders for investigative purposes in a potential shareholder class actions.
The case concerned shareholders of Arrium seeking to utilise the examination process under the Corporations Act 2001 (Cth) to effectively determine the viability of possible claims that could be brought against Arrium Ltd (in liq) (Arrium), its directors and auditor.
In brief
In brief
In the Davies Collison Cave Legal Update webinar on 16 July 2020, we discussed the temporary changes to Australian insolvency laws that had been introduced in response to the COVID-19 pandemic. These changes, enacted under the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (Act), affected provisions of the Corporations Act 2001 (Cth) relating to:
- insolvent trading where debts had been incurred in the ordinary course of the company’s business; and
- the statutory demand regime.
Broadly, the temporary changes:
Recent changes in the Australian regulation of third-party funders will have a dramatic effect on the funding of certain disputes. Although these changes were accompanied by Government and industry commentary that they would not affect litigation funding for insolvency-related claims, this may not be the case for all insolvency funding arrangements.
Liquidators need to be mindful that a disclaimer of property may be challenged. The Supreme Court of Victoria underscored a key issue in establishing "prejudice" to creditors in a liquidation, holding that a disclaimer of property may be set aside where the liquidators are indemnified.