In brief
Australia's borders may be closed, but from the start of the pandemic, Australian courts have continued to grapple with insolvency issues from beyond our shores. Recent cases have expanded the recognition of international insolvency processes in Australia, whilst also highlighting that Australia's own insolvency regimes have application internationally.
Key takeaways
COVID-19
Government Intervention Schemes
Current as of 21 May 2021
Government Intervention Schemes
COVID-19 Government Intervention Schemes 2
Countries around the globe are facing unprecedented and rapid change due to the COVID-19 pandemic. This guide provides a summary of key government interventions around the globe in relation to: EU State Aid Approvals (for EMEA region), foreign investment restrictions, debt, equity and taxation.
On December 24, 2020 Brazilian Bankruptcy Law was amended by Law 14.112, to make the process of bankruptcy and judicial recuperation (Brazilian equivalent to US Chapter 11) more efficient, in view of the final distress triggered by the COVID-19 pandemia.
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:
Introduction
The concept of winding up does not exclusively apply to insolvent companies. Solvent companies can also be wound up, on the initiation of the company’s directors and shareholders (for example, as part of a corporate reconstruction or to close down non-operating or redundant entities).
An overview of the two key procedures to effect the dissolution of a solvent Australian company, being Members’ Voluntary Liquidation and Deregistration, is set out below.
The current COVID-19 market environment presents unique circumstances to companies and investors who may, as a result of the tumultuous markets and the financial and personal effects of COVID-19, have opportunities to acquire distressed businesses at potentially depressed prices. Particularly in this market environment, though, one or more of the following scenarios may apply:
What a director wanting to enter the safe harbour must do
Directors in Australia have long had a statutory duty to prevent insolvent trading. The duty is engaged where:
On November 1, 2019, reforms to Canada’s Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA) that were announced in Canada’s federal 2019 budget will come into force. Key changes to the insolvency regime include:
In McGoey (Re), 2019 ONSC 80, Justice Penny of the Ontario Superior Court of Justice found trusts over two properties held by a bankrupt were void as shams. In his decision, Justice Penny noted that had he not found the trusts to be sham trusts, he would still have set them aside as fraudulent conveyances, making us ask: “what is the difference between a sham trust and a fraudulent conveyance?”
The UAE has issued by Decree Federal Law No. (10) of 2018 on Netting (theUAE Netting Law), with the aim of strengthening the regulatory framework for the settlement of obligations arising from qualified financial contracts. Parties to a contract previously relied on Article 183 of Federal Law No. (9) of 2016 on Bankruptcy (the Bankruptcy Law) to settle debts agreed to under a contract, provided that it is within the context of insolvency and that such contract does not fall within the claw-back provisions (Article 168 of the Bankruptcy Law).