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GREATER SYDNEY’S 2021 LOCKDOWN: WILL BUSINESSES SINK OR SWIM?

By Anica Cunanan, Solicitor at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

Greater Sydney is currently in a lockdown and has remained in the dark with respect to whether, and when businesses would receive some relief.

Last year, the Federal Government introduced the JobKeeper scheme to assist with keeping businesses afloat (including employees within those businesses) through of the payment of wage subsidies subject to certain criteria.

The Morrison and Berejiklian Governments have announced that NSW businesses will finally receive some relief as we enter the fourth week of lockdown in NSW. It is evident that regardless of whether lockdown is in fact extended past 30 July 2021, businesses have already experienced a substantial hit. Should lockdown continue to be extended, we may see plenty of businesses struggling to make it through this lockdown.

On 13 July 2021, The Premier, Treasurer released some information regarding the new NSW COVID-19 support package, including the following:
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Don’t Go Chasing Waterfalls – COVID-19 Safe Harbour is (still) not Safe

The temporary safe harbour protection from director liability for insolvent trading expires on 31 December 2020. However the Government has not corrected a critical timing issue which exists in the COVD-19 safe harbour legislation. This means directors must appoint an external administrator to their company on or before 31 December 2020, if they wish to take advantage of the COVID-19 safe harbour protection from insolvent trading .

The temporary protection is found in section 588GAAA of the Corporations Act 2001 (Cth). There has been some recent debate about whether the words “before any appointment during that period” of an external administrator, mean what they appear to say, namely that any appointment must take place “during that period” of the temporary safe harbour expires.

Our Stephen Mullette has recently responded to the alternative view – that an appointment can be delayed until the new year. Unfortunately, the conclusion is that the better view is still that to take advantage of  the safe harbour defence, the directors must have appointed an external administrator before 1 January 2021. You can read the further consideration here, and make up your own mind.
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Danger – COVID-19 Safe Harbour STILL Requires Early External Administrator Appointment

The Government has recently extended COVID-19 business protection measures introduced in March, including the temporary safe harbour protection from director liability for insolvent trading. These protections will now expire on 31 December 2020. However the Government has not corrected a critical timing issue which exists in the COVD-19 safe harbour legislation. This means directors must appoint an external administrator to their company on or before 31 December 2020, if they wish to take advantage of the COVID-19 safe harbour protection from insolvent trading.

In March Parliament passed a raft of legislative reforms in an attempt to provide protections for businesses an ameliorate the economic effects of the coronavirus in Australia. One of these amendments was temporary legislation to protect directors from liability for insolvent trading during the global COVID-19 pandemic. This temporary protection is found in section 588GAAA of the Corporations Act 2001 (Cth). This safe harbour protection from insolvent trading will mean that directors will not be personally liable for debts incurred in the ‘ordinary course of business’, provided those debts were incurred during the operation of the temporary legislation, presently which will now expire at the end of 31 December 2020.
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New! Priority Migration Skilled Occupation List

New! Priority Migration Skilled Occupation List

A new Priority Migration Skilled Occupation List (PMSOL) was announced on 2  September 2020.

Occupations

This list aims to support Australia’s economic recovery after COVID-19 based on advice from the National Skills Commission and consultation with relevant Commonwealth agencies, and comprises:

  • 111111: Chief Executive or Managing Director
  • 133111: Construction Project Manager
  • 233512: Mechanical Engineer
  • 253111: General Practitioner
  • 253112: Resident Medical Officer
  • 253411: Psychiatrist
  • 253999: Medical Practitioner nec
  • 254111: Midwife
  • 254412: Registered Nurse (Aged Care)
  • 254415: Registered Nurse (Critical Care and Emergency)
  • 254418: Registered Nurse (Medical)
  • 254422: Registered Nurse (Mental Health)
  • 254423: Registered Nurse (Perioperative)
  • 254499: Registered Nurses nec
  • 261312: Developer Programmer
  • 261313: Software Engineer
  • 312911: Maintenance Planner

The PMSOL will be reviewed and updated regularly depending upon its impact and changes in the economy.

Exemptions and Priority Cases

Offshore visa holders who have been sponsored by an Australian business in a PMSOL occupation can request an exemption from Australia’s travel restrictions but will be subject to a strict 14 day quarantine period on arrival at their own expense.
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Tougher Labour Market Testing and Nomination requirements due to COVID

New! Tougher Labour Market Testing and Nomination requirements due to COVID

The Australian Government has recently taken steps to protect job opportunities for Australians in response to the COVID-19 pandemic and fill gaps in critical sectors.

New Rules

As a result, current labour market testing requirements(LMT) have been enhanced to ensure that Australian workers are prioritised for job opportunities in Australia.

Specifically, a new legislative instrument has been introduced and requires any future nominated positions to be advertised on the Government’s Jobactive website.

This measure is in addition to the requirement for at least two advertisements in one or more mediums outlined in the existing policy.

Businesses that are considering employing overseas skilled workers on a Subclass 457 (Temporary Work (Skilled)) visa, Subclass 482 (Temporary Skill Shortage) visa, or Subclass 494 (Skilled Employer Sponsored Regional (Provisional)) visa will have to abide by these requirements.

Key Date and Exceptions

The enhanced LMT requirements apply to nominations lodged on or after 1 October 2020. 

The amendment will not affect nominations lodged prior to 1 October 2020 or nominations for a select occupation or a select position to which alternative evidence arrangements apply.

More Attention

There will be more attention given to employer nominations in relation to Australian workers in similar occupations when considering whether there is a genuine need for an overseas worker including:
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New! Travel Exemptions

New! Travel Exemptions

Due to COVID-19, currently only Australian citizens and permanent residents are permitted to enter Australia. However, immediate families of Australian citizens or permanent residents with a temporary visa and skilled individuals in certain critical sectors can apply for an exemption from the current restrictions to enter the country.

Exemption Request

From 2 September 2020, visa applicants or current visa holders who are working and/or sponsored in a Priority Migration Skilled Occupation List (PMSOL) may be eligible to request an exemption to enter Australia. There is no need to hold a current visa to lodge the exemption request.

To apply for a travel exemption applicants need to provide certain mandatory information to the Department and complete and pay for a mandatory 14-day quarantine period.

Next Steps 

We can assist you with your application to the Department for a travel exemption if you are:

  • an immediate family member of an Australian citizen or permanent resident
  • a sponsored employee whose occupation is on the current PMSOL
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Insolvency Relief Extended until New Years!

By Hayley Hitch, an Associate of Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group


The Morrison Government earlier this year introduced the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) which came into effect on 25 March 2020 to provide relief to individuals and entities under the Corporations Act 2001 (Cth), Bankruptcy Act 1966 (Cth) and supporting legislation. These changes were due to expire on 25 September 2020, where the legislation was expected to revert back to its former position where, for example, statutory demands and bankruptcy notices required a 21 day response period.

You may recall our earlier blog which goes into some detail about these changes, this may be viewed here.

The Morrison Government has however today extended the operation of the relief provided (and described above) until 31 December 2020. This means that:

  1. Any statutory demands issued under the Corporations Act 2001 (Cth) on or before 31 December 2020 will need to provide the debtor with a period of 6 months to respond and be for at least $20,000;
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Danger – COVID-19 Safe Harbour Flaw Requires URGENT External Administrator Appointment

A fatal flaw exists in the government’s COVD-19 safe harbour legislation. This means directors must appoint an external administrator to their company on or before 24 September 2020, if they wish to take advantage of the COVID-19 safe harbour protection from insolvent trading.

At the beginning of the global pandemic the Australian Federal Government introduced temporary legislation to protect directors from liability for insolvent trading during the global COVID-19 pandemic. This safe harbour protection from insolvent trading will excuse directors for liabilty in respect of debts incurred in the ‘ordinary course of business’ during the operation of the temporary legislation, presently due to expire at the end of 24 September 2020.

However, for reasons which are not clear, but possible linked to the urgency with which the legislation was passed, the drafters included an additional fundamental and crucial requirement to gain the benefit of this COVID-19 safe harbour protection from insolvnt trading. That requirement is that in order to gain this COVID-19 safe harbour protection, an external administrator (either a voluntary administrator or a liquidator), must have been appointed before the legislation expires at the end of 24 September 2020.
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