Cognac Ferrand S.A.S. v. Mystique Brands LLC, No. 20 Civ. 5933 (S.D.N.Y. Jan. 31, 2021) [click for opinion]
In brief
The COVID-19 pandemic has put the rescue of struggling but viable businesses front of the agenda. The initial response of the Belgian government and legislator was a moratorium on enforcement measures and bankruptcy petitions. Such moratorium can however not be a structural solution in the long term, and expired on 31 January 2021.
In brief
In brief
Creditors commonly find that their applications to wind up a company are suddenly deferred at the last minute by the appointment of a voluntary administrator. Now, in the early days of the small business restructuring (Part 5.3B) process, the courts are already grappling with those circumstances in the context of that new regime. At the time of writing1, only four restructuring appointments under Part 5.3B have been notified to ASIC. Two of them have been the subject of court proceedings.
The resulting decisions reveal:
In brief
In brief
In brief
Can you take security over all types of assets, including working capital? Generally yes, before filing for the reorganization or the ruling setting forth the start of the liquidation bankruptcy. After the beginning of the reorganization proceedings, no further security interests can be granted over the assets of the debtor for credits due before the beginning of the reorganization proceedings. The debtor can grant security interests for new creditors after the start of the reorganization proceedings.
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.
Directors of Australian companies face significant personal monetary -- and potential criminal and adverse professional -- consequences if they allow the company to trade whilst insolvent.
Australian insolvent trading laws are harsher, and more frequently utilised to prosecute directors personally, than in many other jurisdictions including in the US and the UK.
Accordingly, frequent assessment of a company's solvency by its directors is crucial, particularly in financially difficult times, as are active steps to address any potential insolvency.