covid19-law.com.au
2. Commercial
A. Bankruptcy & Insolvency
i. Legislation
Commonwealth:
Bankruptcy Act 1966 (Cth) amended by the Coronavirus Economic Response Package Omnibus Act 2020 (Cth).
Made under Bankruptcy Act:
Victoria:
Made under the Corporations Act 2001 (Cth), as applied to co-operatives by s 4 of the Co-operatives National Law Application Act 2013 (Vic):
ii. Case law
Courts have considered the impact of the response to COVID-19 on several processes relating to bankruptcy and insolvency.
COVID-19 may be relevant to the timing of an administration under the Corporations Act 2001 (Cth).
In Bumbak (Administrator), in the matter of Duro Felguera Australia Pty Limited (Administrators Appointed) [2020] FCA 422, in granting an extension of the convening period for the second meeting of creditors under s 439A(6) of the Corporations Act 2001 (Cth), the Federal Court took into account that COVID-19 would affect the timely administration of the relevant company to some extent (at [3]). Similarly, in Eagle, in the matter of Techfront Australia Pty Limited (administrators appointed) (No 2) [2020] FCA 618, the Court extended the convening period in part on the basis that "the administrators have been diligent in the conduct of the administration, especially having regard to the difficulties imposed by measures taken by government to suppress the spread of the COVID-19 virus": at [34].
In Brereton, in the matter of MyHouse (Aust) Pty Limited (administrators appointed) [2020] FCA 610, the Federal Court granted an extension of the convening period on bases that included that the administration of the relevant company was complex, having regard to the scope of the company’s business, the stage of the sale process and the practical and economic constraints arising from isolation and physical distancing requirements designed to limit the spread of COVID-19 ([56]).
COVID-19 may also be relevant to the manner in which an administration is conducted.
The extraordinary and ever-changing circumstances associated with COVID-19 were considered by the Federal Court to justify the making of an order temporarily limiting the personal liability of administrators under s 447A(1) of the Corporations Act 2001 (Cth) in Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 472 (see [45]-[57]; see also the Court’s extension of that order in Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 3) [2020] FCA 555). Further, the Court took into account the impact of COVID-19 in modifying various processes associated with the administration of Virgin Australia in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571, noting that the COVID-19 pandemic, and consequent restrictions on the movement and behaviour of people, required flexibility in the application of laws and for the Court to exercise any discretion residing in it to ensure that the Australian community and economy were supported during the pandemic ([5]).
Orders were also made under ss 443A, 443B and 447A of the Corporations Act 2001 (Cth) in Eagle, in the matter of Techfront Australia Pty Limited (administrators appointed) [2020] FCA 542, in order to alleviate difficulties caused by COVID-19 measures, including extensions of time, orders for electronic communications with creditors, and permitting creditors’ meetings by electronic media. Farrell J there stated, by reference to Capic v Ford Motor Company of Australia Limited (Adjournment) [2020] FCA 486 at [5] (Perram J), that “it is apparent that public institutions such as the Court must do all they can to facilitate the continuation of the economy” (Eagle, [28]).
The Federal Court has also made orders providing for meetings in respect of a scheme of arrangement to occur virtually: Avita Medical Limited, in the matter of Avita Medical Limited [2020] FCA 592.
In proceedings under the Bankruptcy Act 1966 (Cth), the Federal Court appears to have taken into account, in determining whether to make an order vesting disclaimed real property in a mortgagee bank under s 133(9) of that Act, that the bank would be willing to entertain a request by the mortgagors in possession to extend the vacation date, if, relevantly, Federal and State Government policies for managing COVID-19 affected the vacation date: Bank of Queensland Limited v State of Western Australia [2020] FCA 442, [39]-[42].
iii. Further resources
A. Bankruptcy & Insolvency
i. Legislation
Commonwealth:
Bankruptcy Act 1966 (Cth) amended by the Coronavirus Economic Response Package Omnibus Act 2020 (Cth).
Made under Bankruptcy Act:
- Bankruptcy Regulations 1996 (Cth), amended by the Coronavirus Economic Response Package Omnibus Act 2020 (Cth)
Victoria:
Made under the Corporations Act 2001 (Cth), as applied to co-operatives by s 4 of the Co-operatives National Law Application Act 2013 (Vic):
ii. Case law
Courts have considered the impact of the response to COVID-19 on several processes relating to bankruptcy and insolvency.
COVID-19 may be relevant to the timing of an administration under the Corporations Act 2001 (Cth).
In Bumbak (Administrator), in the matter of Duro Felguera Australia Pty Limited (Administrators Appointed) [2020] FCA 422, in granting an extension of the convening period for the second meeting of creditors under s 439A(6) of the Corporations Act 2001 (Cth), the Federal Court took into account that COVID-19 would affect the timely administration of the relevant company to some extent (at [3]). Similarly, in Eagle, in the matter of Techfront Australia Pty Limited (administrators appointed) (No 2) [2020] FCA 618, the Court extended the convening period in part on the basis that "the administrators have been diligent in the conduct of the administration, especially having regard to the difficulties imposed by measures taken by government to suppress the spread of the COVID-19 virus": at [34].
In Brereton, in the matter of MyHouse (Aust) Pty Limited (administrators appointed) [2020] FCA 610, the Federal Court granted an extension of the convening period on bases that included that the administration of the relevant company was complex, having regard to the scope of the company’s business, the stage of the sale process and the practical and economic constraints arising from isolation and physical distancing requirements designed to limit the spread of COVID-19 ([56]).
COVID-19 may also be relevant to the manner in which an administration is conducted.
The extraordinary and ever-changing circumstances associated with COVID-19 were considered by the Federal Court to justify the making of an order temporarily limiting the personal liability of administrators under s 447A(1) of the Corporations Act 2001 (Cth) in Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 472 (see [45]-[57]; see also the Court’s extension of that order in Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 3) [2020] FCA 555). Further, the Court took into account the impact of COVID-19 in modifying various processes associated with the administration of Virgin Australia in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571, noting that the COVID-19 pandemic, and consequent restrictions on the movement and behaviour of people, required flexibility in the application of laws and for the Court to exercise any discretion residing in it to ensure that the Australian community and economy were supported during the pandemic ([5]).
Orders were also made under ss 443A, 443B and 447A of the Corporations Act 2001 (Cth) in Eagle, in the matter of Techfront Australia Pty Limited (administrators appointed) [2020] FCA 542, in order to alleviate difficulties caused by COVID-19 measures, including extensions of time, orders for electronic communications with creditors, and permitting creditors’ meetings by electronic media. Farrell J there stated, by reference to Capic v Ford Motor Company of Australia Limited (Adjournment) [2020] FCA 486 at [5] (Perram J), that “it is apparent that public institutions such as the Court must do all they can to facilitate the continuation of the economy” (Eagle, [28]).
The Federal Court has also made orders providing for meetings in respect of a scheme of arrangement to occur virtually: Avita Medical Limited, in the matter of Avita Medical Limited [2020] FCA 592.
In proceedings under the Bankruptcy Act 1966 (Cth), the Federal Court appears to have taken into account, in determining whether to make an order vesting disclaimed real property in a mortgagee bank under s 133(9) of that Act, that the bank would be willing to entertain a request by the mortgagors in possession to extend the vacation date, if, relevantly, Federal and State Government policies for managing COVID-19 affected the vacation date: Bank of Queensland Limited v State of Western Australia [2020] FCA 442, [39]-[42].
iii. Further resources
|
Image credit: Fusion Medical Animation
|
Site powered by Weebly. Managed by SiteGround