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COVID-19: Will my hearing go ahead? – Part 3

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

This is part 3 of our series on what will constitute valid grounds for an adjournment of a pending hearing, due to COVID-19 and the global coronavirus pandemic.

In Talent v Official Trustee in Bankruptcy & Anor (No 5) [2020] ACTSC 64 the Plaintiff sought an adjournment of the trial hearing, arguing that he was an ‘at risk’ person because he suffered from leukaemia. Doctors had recommended that he remain isolated. [...]  READ MORE →

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The “arid technicality” of Bankruptcy Notices?

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

At a high level the process for applying to make someone bankrupt may appear simple and straightforward. But, as the old adage goes, the devil is in the detail. At a granular level, the rules in bankruptcy proceedings are rather technical and procedures must be strictly adhered to. Often enough, a party will make a mistake where the consequence is they must start all over again, adding to lost time and increased costs. [...]  READ MORE →

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COVID-19 and Corporate Insolvency: What does an increase in corporate insolvency mean to creditors?

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

In these difficult times, recent legislative amendments provide assistance for debtors, but risk for creditors. Going forward, it will be important for creditors to carefully monitor their credit policies. Creditors are likely see more spikes in default rates over the next months while government restrictions and businesses’ staff isolation plans remain in place. Where a debtor is placed into external administration, they should be aware of their rights (and duties) during the insolvency process. [...]  READ MORE →

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Third Party Facilitators and Pre-Insolvency Advisers: Illegal Phoenixing Amendments 2020 #4

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

In our last blog we discussed some of the implications of the new legislation designed to prevent ‘creditor-defeating dispositions’.

In addition to it being it being a voidable transaction, the new legislation puts a duty on the company’s director to prevent the company from entering into a creditor-defeating disposition. Section 588GAB of the Corporations Act 2001 (Cth) creates a personal liability on directors for damages and pecuniary fines, as well as being a criminal offence. In respect of pre-insolvency advisers, section 588GAC is a similar provision applying to any third party who ‘procures, incites, induces or encourages’ a company to make a creditor-defeating disposition of property. The explanatory memorandum states: [...]  READ MORE →

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COVID-19 Credit Crisis – Where can Accountants and Advisors Turn for Help?

By Ellen Ferris, a Solicitor in Matthews Folbigg’s Insolvency, Restructuring and Debt Recovery Group.

Accountants and financial advisors are the first port of call in a financial storm. Never is that need more prevalent than now, during the COVID-19 pandemic.

Among other things, accountants and financial advisors should be able to consider discussing the following options with their clients:

  • Voluntary administration – especially the option for the statutory moratoriums gained by voluntary administration;
  • Deeds of Company Arrangement (DOCA) – including Holding DOCAs which have been recently upheld by the High Court – see here;
  • The existing Safe Harbour provisions – see here;
  • The new COVID-19 protections against insolvent trading – see our blog here;
  • Informal restructuring of companies and business (making sure you avoid the anti-phoenixing legislation – see our blogs here); and
  • If all else fails, promptly appointing a suitable qualified liquidator to wind up the company.

Accountants and advisors should advise clients early in respect of these matters. Time is critical and the stakes are high – both for advisors and directors – and advisors must be prudent in advising their clients who appear to have long term issues with solvency; it is better to speak with a specialist now for restructuring advice, rather than later. This will ensure that when things do improve, they will be in a better position to take advantage of the situation. [...]  READ MORE →

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Virgin Australia Voluntary Administration – A Superhero Tactic?

By Anica Cunanan, Law Clerk and Darrin Mitchell, Senior Associate, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

The term voluntary administration has been prevalent in the media this year, even before the significant commercial difficulties experienced during the COVID-19 pandemic. Virgin Australia is the latest major company to head down this path.

Is this the end for Virgin? Can it recover? Can the Government still bail out the company? More importantly, perhaps, should it? [...]  READ MORE →

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COVID-19: Will my hearing go ahead? – Part 2

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

We are continuing our series on whether a global pandemic will allow (or force) an adjournment of pending court proceedings.

In Kahil v R [2020] NSWCCA 56 Senior Counsel for the accused sought leave to withdraw from appearing for a co-accused on the 7th day of an estimated 3 week criminal trial. This was because he was aged 69, had a “compromised immune system” and was concerned about his exposure to one of the co-accused (his client) who he described as “fluey”. Counsel had tried to be tested for the COVID-19 coronavirus over the weekend and had been refused because “he did not qualify for a test”. [...]  READ MORE →

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COVID-19 and Corporate Insolvency: New tax legislation directors need to know

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

In the light of the COVID-19 outbreak, the Federal Government has acted to ameliorate some risks to directors. This includes recently introduced risks to directors.  Directors should be aware of new amendments to the Taxation Administration Act 1953 (Cth) (“the TAA”). The amendments include:

  1. New rules about post-dating ASIC notification of a director resignation;
  2. An estimates regime for GST payments;
  3. Application of the Director Penalty Notice (“DPN”) regime to account for the estimates regime for GST payments; and
  4. Retention of tax refunds for failing to comply with obligations.

Director Resignations

These new rules provide that any notification of a director resignation lodged with ASIC 28 days after the resignation date will only be effective from date of notification. This means that even if a director resigned several years ago, he or she will remain a director (with all of the liabilities associated with such appointment) until their resignation is lodged with ASIC. Therefore, directors who resign should ensure that they lodge a Form 370 with ASIC as soon as possible. If they fail to notify ASIC within 28 days, they may find themselves liable in respect of any non-compliance by the remaining directors. [...]  READ MORE →

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BANKRUPT MAN CONVICTED OF CRIMINAL OFFENCES

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

The idea of bankruptcy began in England in the early sixteenth century when merchants and traders conducted business on credit.  A bankrupt person could face imprisonment until released by the Lord Chancellor after disclosure of all debts and various tasks had been completed.  In the late seventeenth century Lord Kenyon reasserted the old sentiment that “Bankruptcy is considered a crime and a bankrupt in the old laws is called an offender.” [...]  READ MORE →

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Creditor-Defeating Dispositions and Some Implications: Illegal Phoenixing Amendments 2020 #3

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

In this series of blogs we are looking at amendments to the Corporations Act arising from the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (Cth) which came into effect as of 18 February 2020. The amendments introduce a new concept, called a “creditor-defeating disposition”. This is a transfer of assets for less than the best price obtainable, which hinders assets from being available in the winding up of the company, and where either (according to section 588FE(6B)): [...]  READ MORE →

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COVID-19 and Corporate Insolvency: What should directors do?

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

During the COVID-19 outbreak, insolvent trading laws have been relaxed. But this does not mean there is no risk to directors. In reality the breathing space has simply been extended to allow directors to work out a solution. In our previous blog in this series, we discussed the obligations on directors when their companies are or might become insolvent. This blog explores what directors should do about it. [...]  READ MORE →

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COVID-19: Will my hearing go ahead? – (Part 1)

By Andrew Hack, Solicitor, and Stephen Mullette, Principal, of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.

Due to COVID-19, not only are people encouraged to stay at home and avoid going out in public unnecessarily, you could be committing a crime if you do. But what if you have a court case on foot?

Telephone and audio visual links are now frequently being used to run lists and even hearings, where others are being adjourned or vacated. However the use of technology to run court matters is different depending on the court, the type of matter and even the circumstances of each individual case. In a series of blogs we look at examples of various court applications which give us an idea of how the courts are handling issues arising from COVID-19: [...]  READ MORE →