Recent Developments
The BLG Monthly Update is a digest of recent developments in the law which Neil Guthrie, our National Director of Research, thinks you will find interesting or relevant – or both.
Mills Oakley is a leading national law firm with offices in Melbourne, Sydney, Brisbane, Canberra and Perth. With over 100 partners and more than 670 staff, we offer strong expertise across all key commercial practice areas.
From origins in Melbourne in 1864, Mills Oakley has grown to become a domestic leader in legal services with a client base of ASX-200 listed companies, mid-sized corporations, the public sector and not-for-profit organisations.
In the current climate, many businesses will suffer from financial difficulties, though this does not necessarily mean that the businesses are insolvent. There are a number of indicators that may suggest that a company is insolvent, rather than just suffering temporary financial issues. Whether you are a creditor, a company director or other stakeholder, you should be aware of these indicators and what a company’s insolvency could mean for you.
What Does it Mean to be Insolvent?
As the Novel coronavirus (COVID-19) pandemic continues to spread across the globe, people and businesses are facing unprecedented challenges, both immediate and strategic. Governments in various jurisdictions have announced various measures to try to alleviate the distress caused by the numerous issues that have arisen and continue to arise, particularly around cashflow and employees.
The Australian Government has announced temporary measures to curtail the impact of COVID-19 on Australian businesses by lessening the threat of otherwise viable businesses being placed into external administration. In part, these measures seek to prevent the winding up of companies which are experiencing short term financial distress and protect company directors from potential personal liability in order to incentivise continued trade through the COVID-19 health crisis. Similar temporary relief measures extend to individuals in financial difficulty.
The Federal Government has recently introduced the Coronavirus Economic Response Package Omnibus Bill 2020 (Bill).
Schedule 12 of the Bill will provide relief to individuals and businesses facing financial distress due to the COVID-19 crisis by effecting temporary changes to the Corporations Act 2001 (Cth) (CorporationsAct), the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) and the regulations to those Acts.
The Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2019 was passed by both houses of Parliament on 5 February 2020, with an amendment made by the Senate to review the operation and effectiveness of the legislation after five years accepted by the House of Representatives.
The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 (Cth) (Amending Act) passed into law on 17 February 2020, over a year after it was first introduced to Parliament.
Placing phoenix activity firmly in its crosshairs, the Amending Act introduces long anticipated reforms to Australia’s efforts to curb phoenix activity.
Background
In its recent decision in the ongoing Solar Shop litigation,[1] the Full Federal Court established two key principles which will have significant ongoing implications for the conduct of unfair preference claims: