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Statutory demand – FED

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The minimum amount for issue of a statutory demand increases from 1 July 2021.

The Corporations Amendment (Statutory Minimum) Regulations 2021 permanently increases the amount at which a creditor can issue a statutory demand to a company. This ‘statutory minimum’ will be increased from $2,000 to $4,000.

The By Lawyers Insolvency – Company liquidation Guide has been updated with an Alert, to assist practitioners who may be advising clients about their debt recovery options and need to consider the forthcoming increase. The commentary will be amended accordingly in due course.

A statutory demand, under s 459E of the Corporations Act 2001, for a company to pay a debt due and owing, can be a precursor to an application for winding up the company, relying upon non-compliance with the demand to establish a presumption of insolvency. The demand may be contested on the grounds of a genuine dispute about the debt, given that the demand does not need to be based upon a judgment.

Insolvency – FED

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Insolvency practitioners and lawyers acting for small business clients are advised that the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 and Corporations Amendment (Corporate Insolvency Reforms) Regulations 2020 commenced on 1 January 2021.

These instruments amend the Corporations Act 2001 and Corporations Regulations 2001 to introduce two new insolvency processes: small business restructuring and the simplified liquidation process.

Small business restructuring

Under Part 5.3B of the Corporations Act 2001 an eligible company may have a small business restructuring practitioner appointed. This enables small companies that are financially stressed to restructure debt to continue to trade. The process is supervised by a small business restructuring practitioner, who must be a registered liquidator. Directors play a large role and retain control of the business under supervision. This reduces the costs of external administration and may see the company survive the financial stress experienced.

Simplified liquidation process

Eligible companies may access a simplified and faster liquidation process under Part 5.5 of the Corporations Act 2001, which reduces the costs and time of the process to ensure creditors are paid. In this process liquidators are able to adopt a simplified liquidation process with reduced compliance requirements.

The two new processes are aimed at supporting small businesses in financial stress.

The By Lawyers Insolvency – Company Liquidation commentary has been updated accordingly.

1 January updates – All states

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The By Lawyers has attended to the following 1 January updates required by legislation and practice in all relevant jurisdictions:

Land tax – Increases to threshold values – NSW

Land tax thresholds in NSW are indexed to rise on 1 January each year.

The 2021 threshold combined land value has increased to $755,000 for all liable land. Special trusts and non-concessional companies are excepted.

A marginal tax rate of 1.6% of the aggregate taxable value above the tax-free threshold plus $100 applies.

If the aggregate taxable value exceeds the premium rate threshold of $4,616,000 then $60,164 is payable plus a marginal tax rate of 2% over that amount.

All relevant commentary and precedents in the By Lawyers Conveyancing & Property and Trusts guides have been updated accordingly.

By Lawyers Contract for sale of land

The 2021 edition is now available on the Sale of real property matter plan in the Contract section.

Leases and subleases – NSW, VIC, QLD, SA and WA

The 2021 editions are now available on the Leases – Act for Lessor matter plan for each jurisdiction.

These additions form part of our continuing commitment to enhancing our content and helping our subscribers enjoy practice more.

Bankruptcy

In response to the COVID-19 pandemic temporary changes were made to bankruptcy law, increasing the debt threshold to $20,000 from $5,000 and increasing the time frame for a debtor to respond to a bankruptcy notice to 6 months from 21 days.

As of 1 January 2021 these changes have ceased and a new permanent bankruptcy threshold has been implemented.

The current debt requirement for bankruptcy is a minimum debt of $10,000 and the current time to respond to a bankruptcy notice is 21 days.

The By Lawyers Insolvency – Bankruptcy of individuals publication has been updated accordingly.

Always up to date

In addition to our annual 1 January updates, By Lawyers ensures our publications are updated for 1 June and any other statutory or regulated adjustments where necessary. We also promptly  update our content for all relevant legislative amendments and other legal developments throughout the year, in all jurisdictions.

The team at By Lawyers wishes everyone a prosperous and safe 2021.

101 Costs Answers – ALL STATES

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101 Costs Answers is the latest addition to the By Lawyers ‘101’ series of helpful reference materials.

Located in the Reference materials folder on every By Lawyers matter plan, this publication contains valuable commentary and precedents on all aspects of legal costs.

The precedents include all of the By Lawyers costs agreements/client services agreements and costs disclosures, drawn together from all By Lawyers publications into a convenient single publication.

The By Lawyers costs agreements are compliant with the strict requirements of the various state laws. They cater for all areas of law, with detailed recitals of the scope of work usually undertaken in each type of matter. This not only defines the retainer but makes it easy for practitioners to produce documents quickly upon engagement.

The 101 Costs Answers commentary includes:

Disclosure requirements

The commentary helps practitioners to navigate some of the more complicated disclosure requirements including regulated costs and the specific obligations for different types of litigation matters. The effect of non-disclosure is also covered.

Disbursements

Commentary on defining and recovering disbursements includes relevant case law and examples. The By Lawyers costs agreements are drafted to clearly identify usual disbursements.

Counsel’s fees

The commentary deals with the contractual relationship between solicitors and barristers as well as disclosure requirements. With the solicitor responsible for payment of counsel’s fees regardless of the solicitor’s agreement with the client, the By Lawyers costs agreements include counsel’s fees as specific disbursements which the client is obliged to pay.

Debt recovery

Where debt recovery is necessary, 101 Costs Answers contains letters of demand and example pleadings to assist with the recovery of costs. There is also detailed commentary on costs assessment procedures and the relevant forms for each state are available on the matter plan.

Like all By Lawyers publications, 101 Costs Answers contains interactive links to relevant legislation and cases, which are always kept updated.

Insolvency – FED

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The temporary changes to insolvency laws under schedule 12 of the Coronavirus Economic Response Package Omnibus Act 2020 have been extended to end on 31 December 2020.

The temporary measure were originally set to end on 25 September 2020.

A recap of the changes are as follows:

Bankruptcy

The time for a debtor to comply with a bankruptcy was extended from 21 days to six months. The threshold for initiating bankruptcy proceedings increased from $5,000 to $20,000.

The same six month time extension applies to the time within which a debtor is protected from enforcement action by a creditor, following their presentation of a declaration of intention to present a debtor’s petition, under s 54A Bankruptcy Act.

Liquidation

The time for a debtor company to comply with a statutory demand was extended from 21 days to six months. The threshold to issue a statutory demand increased from $2,000 to $20,000.

Safe harbour

The temporary s 588GAAA ‘Safe harbour—temporary relief in response to the coronavirus’, of the Corporations Act 2001 provides that the existing civil penalties for directors failing to prevent insolvent trading under ss 588G(2) do not apply in relation to a debt incurred by a company if the debt is incurred in the ordinary course of the company’s business and until 31 December 2020.

The By Lawyers Dealing with COVID-19 legal issues commentary has been updated to reflect the revised end date of 31 December 2020 for the Commonwealth government’s insolvency measures.

Temporary changes to insolvency laws – FED

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The Federal Government has made temporary changes to insolvency laws under the Coronavirus Economic Response Package Omnibus Act 2020, aimed at relieving current economic pressures on individuals and companies.

The Act commenced on 25 March 2020.

These temporary changes to insolvency laws are as follows:

Bankruptcy

The time for a debtor to comply with a bankruptcy notice has been extended from 21 days to six months. The threshold for initiating bankruptcy proceedings increases from $5,000 to $20,000. These changes will apply for six months from commencement of the Act.

The same six month time extension applies to the time within which a debtor is protected from enforcement action by a creditor, following their presentation of a declaration of intention to present a debtor’s petition, under s 54A Bankruptcy Act.

Liquidation

The time for a debtor company to comply with a statutory demand has been extended from 21 days to six months. The threshold to issue a statutory demand has been increased from $2,000 to $20,000. These changes will apply until 25 September 2020.

Safe harbour

A new, temporary, s 588GAAA ‘Safe harbour—temporary relief in response to the coronavirus’, of the Corporations Act 2001 provides that the existing civil penalties for directors failing to prevent insolvent trading under ss 588G(2) do not apply in relation to a debt incurred by a company if the debt is incurred in the ordinary course of the company’s business and until 25 September 2020.

Practitioners should keep these changes in mind for the next six months and be aware of the end date, which is 25 September 2020.

Alerts have been added to the By Lawyers Insolvency – Bankruptcy of Individuals, Insolvency – Company Liquidation and Companies commentaries notifying subscribers of these changes.

 

Keep up-to-date with our latest COVID-19 News & Updates

Insolvency – Company liquidation – FED

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A full review of the By Lawyers Insolvency – Company Liquidation guide has been conducted by our highly experienced author, Michael Murray.

The review ensures that all content is in line with current law and practice.

Updates and enhancements include:

  • New commentary on the statutory demand process, including applications to set aside statutory demands; and
  • Updates to a number of precedents to improve the Insolvency – Company Liquidation matter plan.

Keep up to date with By Lawyers

These updates to our Insolvency – Company Liquidation guide are part of By Lawyers commitment to the continual enhancement of our publications. By Lawyers subscribers can be confident that their guides and precedents are always kept up to date so they can enjoy practice more.

Insolvency – Bankruptcy of individuals – FED

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Author review

A full review of the By Lawyers Insolvency – Bankruptcy of Individuals guide has been conducted. The review ensures that all content is in line with current law and practice.

This review was conducted by our highly experienced author, Michael Murray.

Updates and enhancements include:

  • New commentary on recent law changes to debt agreements;
  • New commentary on the Federal Court and Federal Circuit Court processes for creditor’s petitions, applications to set aside bankruptcy notices and examinations; and
  • New commentary and matter plan additions because of new online processes for voluntary bankruptcy.

Keep up to date with By Lawyers

This review of our Insolvency – Bankruptcy of Individuals guide is part of By Lawyers commitment to regular updating and enhancement of our publications. By Lawyers always keeps you up to date so you can enjoy practice more.

Insolvency To Do lists – FED

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The By Lawyers Bankruptcy and Liquidation guides have been updated with the inclusion of four Insolvency To do lists.

These new precedents provide practical guidance for practitioners as they progress through a matter.

The To Do lists provide helpful prompts for each important step to be taken in a matter when acting for either the creditor or the debtor in both personal and corporate insolvency matters, including:

  • Liquidation;
  • Winding up;
  • Deeds of company arrangement;
  • Debt agreements;
  • Personal insolvency agreements; and
  • Bankruptcy proceedings.

The new To Do lists can be found in folder A. Getting the Matter Underway in the By Lawyers Bankruptcy and Insolvency guides and will assist practitioners in safely and efficiently managing their matters.

Costs disclosure – Increase of legal rates during a matter

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Increase of legal rates during a matter

All By Lawyers Costs Agreements and Client Service Agreements have been updated to include a clause notifying a client that legal rates may increase during the course of a matter requiring a revision of the costs estimate provided. This clause provides for 30 days written notice of any proposed changes to legal rates. While such a clause is not required by Legal Profession legislation concerning costs disclosure requirements, providing such notice on initial costs disclosure is considered best practice.

All of our Guides contain Costs Agreements (Client Service Agreements for QLD Guides) within the folder ‘A. Getting the mater underway’. All of our agreements are compliant with the relevant Legal Profession legislation and are reviewed and updated regularly to ensure compliance.

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