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

In brief

What is it?

The UK Corporate Insolvency and Governance Act 2020 came into force on 26 June 2020. It introduced a new restructuring plan procedure amongst its package of permanent measures. The restructuring plan gives directors another tool when considering restructuring options. Directors faced with financial distress can now weigh up the new restructuring plan, or the existing “tried and tested” scheme of arrangement.

In brief

Colombian State of Emergency

The president of Colombia decreed a State of Emergency on the national territory due to the recent COVID-19 outbreak. He has issued a series of measures to contain its effects on public health and the economy. This chapter will be updated on a daily basis, including the principal measures issued by the national government.

Amendments to the Corporations Act 2001 (Cth) (Corporations Act) to implement the measures announced by Treasurer Josh Frydenberg on Sunday, 22 March 2020 to provide temporary relief for financially distressed businesses due to COVID-19 have now come into effect.

The Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (CERPO Act) amendments were passed by the Parliament on 2 March 2020. They will apply for a 6 month period, but may be extended or have impacts beyond that timeframe.

This week’s TGIF considers In the matter of MJM(WA) Enterprises Pty Ltd (in liq) [2018] NSWSC 944, where the Court approved a liquidator’s remuneration but deferred decisions about trust distributions until after the Re Amerind litigation finishes.

What happened?

The company operated two barbershops in Perth as trustee for a family trust before liquidators were appointed in May 2017.

Much has been written and discussed about Australia’s draconian insolvent trading laws and the Federal Government has taken note. It has released draft legislation seeking to amend the Corporations Act in a way that supports the restructuring of financially distressed companies. But do these amendments go far enough in providing companies with the time and space they require when they’re seeking to implement a financial restructuring plan?

BACKGROUND

A recent Victorian Supreme Court decision has resulted in the Commonwealth losing priority status for some $3.8m paid to the employees of a collapsed company, due to an unusual gap in the priority regime created under the Corporations Act.

The recent decision of the New South Wales Supreme Court in Independent Contractor Services (Aust) Pty Limited ACN 119 186 971 (in liquidation) (no 2) [2016] NSWSC 106 found that the statutory scheme of priority does not apply to realisations from circulating trust assets. This decision has potentially profound impacts for both employees and secured creditors in the context of both liquidations and receiverships.

A summary of the case