In brief

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.

Financial Assistance (1)

[UPDATE] Which government support schemes are in place? 

The Federal Government has set up a fund of initially EUR 4 billion by establishing financing companies. With the third 3rd COVID-19 Act, which was passed in the National Council on 03 April, the Federal Government is increasing the fund's resources to up to EUR 28 billion.

An additional financial aid package of up to EUR 34 billion shall consist of

These key action points take into account the UK Pensions Regulator's recent statement on COVID-19. Trustees and employers should continue to monitor further updates from the Regulator.

Defined benefit (DB) arrangements

The Court of Appeal (CA) recently dismissed an appeal to set aside a statutory demand arising out of the failure to pay margin calls in But Ka Chon v. Interactive Brokers LLC (02/08/2019, CACV 611/2018) [2019] HKCA 873, despite the presence of a mandatory arbitration clause. Obiter comments of the CA put into question the recent case law in Re Southwest Pacific Bauxite (HK) Ltd [2018] 2 HKLRD 449 (the “Lasmos case“) that a petition should “generally be dismissed” in the face of a mandatory arbitration clause.  

Some key points 

Russia's Supreme Court guidelines reduce high net worth individuals' ("HNWIs") asset protection opportunities and potentially create risks of additional creditor claims against HNWIs after divorce and asset division between the HNWI and his/her spouse.1

In addition, these guidelines enable third parties, notably creditors of the ex-spouse, to get access to information regarding the HNWI's disputed assets. We summarize the most important points of these guidelines below.

Key developments

Ipso facto clauses An ipso facto clause is a contractual provision that allows one party to the contract to terminate or modify the operation of the contract upon the occurrence of a specified insolvency related event (such as the appointment of an administrator, receiver or liquidator) in respect of another party.

Introduction

In brief

With the courts about to consider a significant and long standing controversy in the law of unfair preferences, suppliers to financially distressed companies, and liquidators, should be aware that there have been recent significant shifts in the law about getting paid in hard times.

Recent development