Following Treasury’s announcement on 24 September 2020 that it will introduce a suite of reforms to Australia’s insolvency framework, the Corporations Amendment (Corporate Insolvency Reforms) Bill 2020 (Cth) (Draft Bill) was released for public consultation between 7 and 12 October 2020, providing much needed clarity as to the practical effect of the insolvency reforms, which are expected to commence on 1 January 2021.

This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

Ongoing uncertainties about the COVID-19 pandemic, coupled with the looming deadline of Brexit, mean businesses and owners are in for a tough ride over the next few months, possibly much longer if the UK continues to face restrictions.

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There remain a number of issues in the proposed insolvency reforms that need careful deliberation, particularly where the Regulations have yet to be released for consideration.

The Corporate Insolvency and Governance Act 2020 ("CIGA") came into force on 26 June 2020 with the main objective of giving businesses "breathing space" in order to continue trading in light of the COVID-19 pandemic. It was progressed quickly through parliament and includes a number of temporary measures aimed at immediately reducing the number of companies entering insolvency procedures.

The Royal Court of Guernsey has recently considered an application under the Companies (Guernsey) Law 2008 (the Law) for the Court to approve a contract for the sale of the assets of a Guernsey company in compulsory liquidation. The decision provides helpful guidance for liquidators and creditors as to the issues the Court will take into account in deciding whether to grant such approval.

Background

There has been much mention in the press in recent times about the amount of allegedly incorrect or fraudulent claims made by employers under the Government’s Coronavirus Job Retention Scheme (“CJRS”) (furlough scheme).

The current global pandemic has provided and will continue to provide plentiful opportunities for fraud and opportunism. One area which is potentially open to abuse is the protection of companies from the service of statutory demands or the presentation of winding up petitions following the enactment of the Corporate Insolvency and Governance Act 2020 (CIGA). It is important to consider alternative remedies if a debtor seeks to use this to their advantage.

Alerts and Updates

The rule becomes effective one year after it is published in the Federal Register.

On October 30, 2020, the Consumer Financial Protection Bureau (CFPB) issued a final rule revising Regulation F, 12 CFR part 1006, which implements the federal Fair Debt Collection Practices Act, 15 U.S.C. 1692, et seq. (FDCPA).