In late September 2020, the federal government announced that it would be introducing changes to Australia's Corporations Act (Act) and the most significant amendments to the corporate insolvency regimes in decades. The main objective is to help the small business sector deal with and overcome the economic, financial and trading challenges posed by the ongoing pandemic. Since then, the government has released its new laws via the Corporations Amendment (Corporation Insolvency Reforms) Bill 2020 (Cth) (New Laws).

The Australian government has taken swift action to enact new legislation that significantly changes the insolvency laws relevant to all business as a result of the ongoing developments related to COVID-1

The Corporate Insolvency and Governance Bill (the “Bill”) was published on 20 May 2020 and introduced a new debtor-in-possession moratorium to give companies breathing space in order to try to rescue the company as a going concern. The Bill went through the House of Commons on 3 June and passed through the House of Lords on 23 June. The Bill was back before the House of Commons today and is likely to receive Royal Assent next week (at which point the Bill will become law).

The ability of suppliers to terminate contracts when a customer becomes insolvent is to be curtailed by the Government under plans published in the Corporate Insolvency and Governance Bill (the “Bill”).

The epidemiological outbreak of COVID-19 has collapsed the international health systems and provoked huge economic losses to global economies. For these reasons, countries affected by COVID-19 have adopted sanitary and economic measures to reduce the spread and negative impact to its economies.

At the end of March, the Government introduced measures providing a moratorium on evictions for commercial tenants for non-payment of rent until 30 June 2020.

Earlier this month, a Wolverhampton-based financial advisor was banned by the Insolvency Service for eight years after his firm provided poor pension investment advice, resulting in clients losing £7 million.

Background

As we close the week which has seen the Government and the Bank of England publish details of their financial support package for business, the business community awaits the formal launch of both the Coronovirus Business Interruption Loan Scheme (CBILS) and the Covid Corporate Financing Facility (CCFF) next week.

CBIL scheme

Courts struggled last year to find a balance between state-licensed cannabis activity and the federal right to seek bankruptcy protection under the Bankruptcy Code. During 2019, we had the first circuit-level opinion in the bankruptcy/cannabis space that appeared to open the door to bankruptcy courts, albeit slightly. We also had lower court opinions slamming that door shut.

Below, we look at a few of the most important decisions issued throughout 2019 and analyze the current state of the law.

The Ninth Circuit's Garvin Decision

On August 26, 2019, President Trump signed the Small Business Reorganization Act (“SBRA”) into law. The SBRA is scheduled to take effect on February 22, 2020.