The Corona Crisis leads worldwide to critical situations for companies.
In light of this, Digitorney has asked lawyers from various countries specialized in restructuring law for recommendations on what needs to be done and which solutions are at hand to weather the Corona Crisis.
This part of our series focuses on Australia:
1) When does a company need to file for insolvency in Australia?
The unprecedent business disruption attributable to COVID-19 has caused signficiant solvency and liquidity issues for Australian companies.The test for insolvency in Australia is whether a business can pay its debts as and when they fall due. That is, it is a cash flow and not a balance sheet test.
2) What liability risks exist for the management in Australia in a corporate crisis?
The recently enacted safe harbour provisions under the Act may provide an avenue for directors to avoid personal liability, in situations where they become aware that the company is, or is becoming, insolvent and pursue a course of action which is reasonably likely to lead to a better outcome for the company. MORE
3) Is there any state aid available for companies in Australia due to the Corona crisis?
The Australian Government‘s economic response to the impacts of the COVID-19 outbreak include a variety of tax concessions, as well as cash flow assistance packages aimed at ensuring that business remain solvent. The Government has increased the instant asset write-off threshold from AUD 30,000 to AUD 150,000 and expanded access to include businesses with an aggregated annual turnover of AUD 500 million, up from AUD 50 million. MORE
4) What immediate measures should an Australian company take if it is affected by the Corona crisis?
In order to address the challenges faced by COVID-19, businesses should prioritise effective communication, both internally and with investors, in relation to the impact of the current situation and an outline of any steps taken to minimise disruption. Where required, businesses should also ensure compliance with any continuous disclosure requirements, particularly in cases where COVID-19 poses a threat to the market value of the company’s securities. MORE
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