Introduction

The Corporate Insolvency and Governance Act 2020 (CIGA or the Act) has introduced new procedures and measures to seek to rescue companies in financial distress as a result of the COVID-19 pandemic and the resulting economic crisis.

CIGA came into force on June 26, 2020 after a speedy progression through Parliament, following the publication of the draft legislation in May. CIGA is part of the Government’s response to the COVID-19 crisis and introduces a number of “debtor friendly” measures to English restructuring and insolvency law, which up to now has been regarded as “creditor friendly”. The two new permanent restructuring procedures leave the current directors in office, with an opportunity to…

Disapproving a High Court’s ordeer interdicting of a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), the Supreme Court recently observed that the IBC is a complete code in itself, having sufficient checks and balances, and thus, the exercise of supervisory and judicial review powers by High Courts demands rigorous scrutiny and judicious application.

Allowing the appeal of a successful resolution applicant against Karnataka High Court’s interdicting of the CIRP, a bench of Justices PS Narasimha and Manoj Misra said,

“In view of the delay in approaching the High Court, particularly when respondent no.1 himself has initiated proceedings under the Code by filing interlocutory applications seeking…

The Corporate Insolvency and Governance Act 2020 (CIGA or the Act) has introduced new procedures and measures to seek to rescue companies in financial distress as a result of the COVID-19 pandemic and the resulting economic crisis.

CIGA came into force on June 26, 2020 after a speedy progression through Parliament, following the publication of the draft legislation in May. CIGA is part of the Government’s response to the COVID-19 crisis and introduces a number of “debtor friendly” measures to English restructuring and insolvency law, which up to now has been regarded as “creditor friendly”. 

Key points for asset-based lenders

We explore the implications for the Act in the context of asset-based lending below. Key points to note are:

• The Act introduces a new “moratorium” procedure allowing eligible companies to continue to trade whilst being protected from creditors who may not take enforcement steps against them. The moratorium is a rescue process intended to give the company a breathing space to allow time to implement a rescue plan. It is not an insolvency process. Importantly, the directors of an eligible company can file the necessary documents required to put the company into a moratorium without giving notice to the holder of a qualifying floating charge. This is a major change, when compared with…

Introduction

The government’s insolvency reforms, which commenced on 1 January 2021, created a new simplified liquidation and new debt restructuring process for small companies/SMEs in particular, and has provided directors with the control and flexibility they need to either restructure their business or wind down operations. In essence, the reforms have allowed viable businesses to survive, or else wind up and move on as quickly as possible, thereby maximising any returns available for…

Australia’s insolvency landscape is changing in response to new economic conditions. NAB examines the latest data to help you best position your professional services business for what’s to come.

Visit nab.com.au/insolvency  to find out how our Professional Services Bankers can help your Insolvency business.

Sources:

2022 insolvencies: ASIC’s Insolvency Statistics series 1.

The fall and rise of insolvencies: ASIC’s Insolvency Statistics series 1.

Cumulative lost Australian GDP growth since pre-pandemic projections: Australian Bureau of Statistics, Australian National Accounts: National Income, Expenditure and

Product, June 2022.

Total amount of Australian COVID-related direct…

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