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ARTICLE · 22 JULY 2020

The forgotten front: COVID-19 relief and preference clawbacks

Corrs Chambers Westgarth
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Discusses potential changes to the temporary insolvency laws designed for financially distressed businesses.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Matthew Critchley
Matthew Critchley
Alicia Salvo
Alicia Salvo
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Federal Treasurer Josh Frydenberg announced recently that the Commonwealth Government is considering extending aspects of the 'regulatory shield' implemented on 24 March 2020, which provided temporary relief from certain insolvency laws for financially distressed businesses.

However, the preferences regime was not included in the suite of temporary legislative changes that were passed in the early days of the COVID-19 crisis. This leaves creditors who have continued to trade with vulnerable companies, exposed to potential clawbacks of payments made to them by those companies, when they are subsequently wound up after government support is ultimately scaled back.

What is the temporary regulatory shield?

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