Along with tightening social controls, the months ahead will be defined by various critical relationships and the rules that govern them. Of course they all interlock: material change in any of them impacts each of the others. Which causes multiple complexities in decision-making and risk assessment processes, both within a business and when looking at critical suppliers and customers:
Landlords and Tenants:
In March 2020 the UK Government announced the suspension of the wrongful trading provisions contained in s.214 of the Insolvency Act 1986. Those provisions impose personal liability on directors found to have over-traded while a company was insolvent. By removing the risk of personal liability, the Government sought to provide directors with the personal protection they required to allow their businesses to continue trading through the pandemic.
Following yesterday’s announcement that a number of the temporary measures brought in by the Corporate Insolvency and Governance Act (CIGA) to ease pressures on companies most at risk of insolvency during the ongoing Covid-19 crisis are to be extended, we look here at some of the key questions arising under CIGA in the context of the commercial landlord and tenant relationship.
The temporary safe harbour introduced by the Federal Government is not a panacea for directors of distressed businesses. It may be time to act now.
The Coronavirus Economic Response Package Omnibus Act 2020 introduced relief measures in the second stage of the Federal Government’s plan to 'cushion the economic impact of the coronavirus and help build a bridge to recovery'.[1]
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
Introduction
Parliament passed on July 27, 2020, the Time Limits and Other Periods Act (COVID-19) (Time Limits Act), which we summarized in a previous bulletin. Briefly, the Time Limits Act automatically suspends statutory time limits for federal civil proceedings for six months and grants federal ministers the power to issue orders extending statutory and regulatory time limits in a range of areas.
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.
NCLAT: Decree holder cannot be classified as a financial creditor for the purpose of initiating Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016 II. Supreme Court: Limitation period for an application under Section 7 of the IBC for initiation of CIRP is three years from the date of default III. NCLAT: IBC has no bar for the 'Promoter' to file 'resolution application', even if otherwise not eligible in terms of Section 29A IV. Consumer Protection Act, 2019: An analysis
While announcements have been made, and measures extended, to help corporate Britain, directors faced with the difficult decision of whether to trade on through the crisis could suddenly very exposed once again.
We now have major new legislation – the Corporate Insolvency and Governance Act 2020 (“CIGA”) – to sit alongside existing tools and processes for restructurings and insolvencies. As litigators, we anticipate how its use may play out in contentious restructurings.