While I am a supporter of the Minimum Financial Requirements (MFR) for contractor licensing, I have also previously pointed out their limitations.
With ongoing restrictions affecting the community as a result of the COVID-19 pandemic, insolvency practitioners will be required to consider how best to facilitate meetings of creditors of companies in external administration and execution of documents by companies with which they deal. The Commonwealth Government has issued a determination relaxing some of the formal requirements set out in the Corporations Act 2001 (Cth) and Insolvency Practice Rules.
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):
Virgin gets some good news! The Federal Court in the first significant legal case arising out of the Virgin collapse has again highlighted the need for flexibility in the application of insolvency laws during the COVID-19 crisis
The recent weeks have seen a number of major corporates enter voluntary administration, including Virgin Australia, Techfront Australia, Collette by Collette Hayman and Carriageworks Sydney, as a result of pre-existing distressed financial positions that were exacerbated by the consequences of the COVID-19 pandemic. The uncertainty that COVID-19 has brought, particularly the restriction on gatherings and the shutdown of non-essential services, created challenges for administrators looking to restructure businesses and maximise returns for creditors.
This week’s TGIF considers the Federal Court’s decision in Australian Securities and Investments Commission v Merlin Diamonds Limited (No 3)[2020] FCA 411, in which, consequent on finding a number of contraventions of the Corporations Act 2001 (Cth), the Court ordered the winding up of that company.
Background
In collaboration with our foreign law firm partners, we continue to update our chart of COVID-19 measures taken by governments around the world. Today’s update includes new information for many countries as indicated in the chart: Global Government Measures Taken in Response to COVID-19.
In the decision of Goyal [1] handed down on 7 April 2020, Justice Markovic of the Federal Court has given approval to liquidators to enter into a litigation funding agreement under section 477(2B) of the Corporations Act 2001 (Cth).
One of the first tasks required of an administrator appointed to a company is to facilitate communications with creditors and conduct creditors’ meetings.
The below decision considers these tasks against the backdrop of public health orders designed to reduce the spread of COVID-19, and the Court’s continued broad application of section 447A of the Corporation Act 2001(Cth) (Act) and section 90-15 of the Insolvency Practice Schedule (Corporations)(Schedule).