Bankruptcy and Insolvency Noticeboard March 2021 - Part 5.3B of the Corporations Act 2000
The Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth) (the Act) commenced on 1 January 2021, following the conclusion of temporary insolvency law relief measures which protected financially distressed businesses throughout the COVID-19 pandemic.
The purpose of the Act included the amendment of the Corporations Act to:
- establish a debt restructuring process for eligible small companies and provide temporary relief for eligible companies seeking to enter the process;
- expand the situations where documents relating to the external administration of a company may be given electronically and allow documents relating to the external administration of a company to be signed electronically; and
- establish a simplified liquidation process for the purpose of winding up the affairs and distributing the property of an eligible company in a creditors' voluntary winding up, as well as the requirements for entering and exiting the process.
On a related issue, ARITA issued the Code of Professional Practice 4th edition (ARITA Code), effective 1 January 2020. The ARITA Code sets the standards for Members in the provision of quality and ethical Insolvency and Advisory Services. The Code is made up of the Introduction, the Code of Ethics, Code of Professional Practice: Insolvency Services (COPP: Insolvency Services) and Code of Professional Practice: Advisory Services (COPP: Advisory Services). Practice Statements are available which provide detailed explanations to support the Code but do not form part of it. The author has included reference to the Code’s relevant provisions throughout the commentary.
The new commentary addressing the Act is complemented by the inclusion of precedents appropriate for the new regime.