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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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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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Simone Brew appointed Managing Director of Matthews Folbigg Lawyers

1 September 2020

Matthews Folbigg Lawyers is delighted to announce the appointment of our new Managing Director, Simone Brew. Simone is the head of the firm’s Litigation, Planning and Local Government groups.

Matthews Folbigg Lawyers is the premier medium sized firm in Western Sydney, based in Parramatta, with 8 practice groups and over 60 lawyers and legal service professionals. This is the first time in the firm’s 60 year history that the firm has had a female Managing Director. Even more notably the firm is owned 50% by our experienced female lawyers.

Chairman of Matthews Folbigg Lawyers, Jeff Brown said “Matthews Folbigg is delighted to announce Simone’s appointment as Managing Director. She has been an integral part of the firm’s Executive group for many years and in particular has been instrumental in leading the firm’s response to the COVID-19 pandemic. This is just one example of the strengths that make her qualified to lead our firm into the future”.
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COVID19 – IP Australia provides relief by way of extensions

We are in an unprecedented times; however, steps are being taken by the Government departments, such as IP Australia, to provide relief to their customers and relieve some of the burden and/or financial strain on applicants.

IP Australia, as of 22 April 2020, will be providing relief to applicants by granting free extensions of time, in respect of most applications and processes.

The extensions of time will provide up to an additional 3 months on any deadline required and the fee for such applications will be waived by IP Australia. IP Australia are even in the process of providing refunds to those who have been impacted by COVID-19 and have lodged extension applications without the fee waiver.

If you would like to discuss how the relief provided by IP Australia may be able to assist you, or if you require assistance with any intellectual property matter, or would like assistance with lodging an application for an extension of time, please contact our Intellectual Property team, Simone Brew and Hayley Hitch.
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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.

Creditors should take note of the changes to the bankruptcy and insolvency regimes designed to protect debtors during the coronavirus period. The changes will limit options to creditors in respect of certain enforcement action. They include:

  1. An increase in the threshold for issuing statutory demands from $2,000 to $20,000;
  2. An increase in the threshold for issuing bankruptcy notices from $5,000 to $20,000;

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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”.

Essentially, this application also meant that the hearing would need to be aborted and the jury discharged.

The District Court judge refused an adjournment, summarising Senior Counsel’s position as: “at best, that you think that you could have been in contact with someone who has not been diagnosed with COVID-19, that perhaps you may have been in contact with it, and you are concerned.”
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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:

In JKC Australia LNG Pty Ltd -V- CH2M Hill Companies Ltd [2020] WASCA 38 an application to adjourn an appeal hearing based upon “issues said to arise from the COVID-19 pandemic” was refused. The Court of Appeal did not accept submissions that the respondents’ senior counsel “would be at a significant disadvantage if he could not see and ‘read’ the court throughout the appeal hearing” – which was a reference to “the benefit of non-verbal communications”. Effectively this appears to be a submission that Senior Counsel would not be able to ‘read the room’. The WA Court of Appeal would not have a bar of it (pun intended), concluding “it is not the case that an appeal hearing by telephone is manifestly inadequate or that an appeal hearing by video‑link is inadequate.”
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COVID-19, self-isolation, and witnessing documents

By Chloe Howard of Matthews Folbigg Lawyers, a lawyer in our Insolvency, Restructuring and Debt Recovery Group

Whilst there have been leaps and bounds in recent years when it comes to the merging of law and technology, properly executing legal documents has escaped this evolution. Even though NSW and some other states have an Electronic Transactions Act, this does not assist with present difficulties imposed with executing Deeds and other formal documents during self-isolation.  Whilst Zoom, Skype and FaceTime can make it seem like you are in the same room as someone else, ultimately the law is clear – this technology cannot replicate the requirements needed for the valid witnessing of formal documents. These requirements include that a witness must be physically present when the document is signed.

But what if you are locked down in self-isolation?

Until the COVID-19 pandemic, this had not really been a pressing issue. But with the Australian Government advocating for more people to work from home and for people generally to self-isolate, what happens to the requirements for witnesses to be physically present to witness a document being signed?
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