Airplane flying in cloudsIn this article, Scott Atkins and Dr Kai Luck look at the important role Australian courts can play in creating a stronger corporate and business rescue culture to help financially distressed but long-term viable entities navigate the economic downturn caused by COVID-19.

Since this article was written, the Federal Court of Australia granted further orders on 13 and 15 May 2020 exempting the voluntary administrators from personal liability for new contracts entered into as they seek to restructure the Virgin entities (which operate Australia’s second major airline) with a view to a going concern sale to a third party.

Looking ahead, it is hoped that COVID-19, and the proactive role currently being taken by the courts, will drive longer-term reform to Australia’s corporate and business rescue laws, possibly adopting certain features of the US Chapter 11 process such as DIP financing and the cram down of secured creditors’ enforcement rights.

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