On 10 September 2020, Kott Gunning published an article discussing the Commonwealth Government’s extension of its: “temporary insolvency and bankruptcy protections” until 31 December 2020.
Yesterday the Corporations and Bankruptcy Legislation Amendment (Extending Temporary Relief for Financially Distressed Businesses and Individuals) Regulations 2020 (Cth) came into effect.
Those regulations amend the Corporations Regulations 2001 (Cth) and the Bankruptcy Regulations 1996 (Cth) and confirm the extension of the: “temporary insolvency and bankruptcy protections” until 31 December 2020.
As we discussed in our article published on 10 September 2020 the Treasure’s “power” to:
- amend or modify; or
- exempt classes of persons from the operation of,
parts of the Corporations Act or the Corporations Regulations, without the need for parliamentary approval, expires on 25 September 2020.
It is unlikely there will be a further extension to the “temporary insolvency and bankruptcy protections” before 25 September 2020 (this Friday).
Therefore, any further extensions to the: “temporary insolvency and bankruptcy protections” by amendments to the:
- Corporations Act 2001 (Cth) and/or the Bankruptcy Act 1996 (Cth); or
- Corporations Regulations 2001 (Cth) and/or the Bankruptcy Regulations 1996 (Cth),
will need to be passed by the Federal Parliament which will hopefully result in a more considered and measured approach to any ongoing or new temporary insolvency and bankruptcy protections because the “one size fits all” approach lacks the necessary subtlety and is not truly responsive.
The issues addressed by the temporary insolvency and bankruptcy protections, whether they continue in any form, will not “just go away”. They need to be properly addressed and resolved. In some circumstances, delay, regardless of whether it supported by “band-aid” legislation and regulations, will adversely affect most people’s interests. You should not wait for this ever increasing can being kicked down the road to stop rolling. Act now.
We can help:
- directors of financially distressed companies understand their obligations and the “temporary” protections afforded to them;
- directors navigate the “temporary protections” landscape, including giving advice about the safe harbour regime and how it interacts with the “temporary protections”; and
- creditors determine the best course of action available to them to recover a debt owed to them, in the shortest possible period.
We look forward to helping you.
The information published in this article is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.