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Insolvency practitioners – How best to facilitate meetings of creditors and execution of documents due to COVID-19

• 15 May 2020 • 5 min read
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With ongoing restrictions affecting the community as a result of the COVID-19 pandemic, insolvency practitioners will be required to consider how best to facilitate meetings of creditors of companies in external administration and execution of documents by companies with which they deal. The Commonwealth Government has issued a determination relaxing some of the formal requirements set out in the Corporations Act 2001 (Cth) and Insolvency Practice Rules.

On 5 May 2020 the Treasurer issued the Corporations (Coronavirus Economic Response) Determination (No 1) 2020 (Determination). The Determination is effective from 6 May 2020 and will expire on 5 November 2020.

Execution of documents by companies

In relation to the execution of documents by companies with which insolvency practitioners are dealing, the Determination:

  • allows a company to execute a document under section 127(1) of the Corporations Act 2001 (Corporations Act) by having a director sign one copy of the document and another director or the secretary sign another copy (often referred to as split execution)
  • allows a company to execute a document by way of electronic communication if:
    • a method is used to identify the person in the electronic communication and to indicate the person’s intention for the document
    • the method is as reliable as appropriate in light of the circumstances and is in fact proven to have fulfilled the function of identifying the person in the electronic communication, either by itself or together with further evidence. This would allow, amongst other things, 'hybrid split execution' where a document is signed by a director and scanned through to another director/secretary who then also signs.
  • confirms that the assumptions under section 129 (5) of the Corporations Act for due execution are available where a document is executed in accordance with the Determination.

It is anticipated that this will make it easier for insolvency practitioners to enter into contracts with companies who may otherwise have difficulty executing documents under the current COVID restrictions.


To assist in the facilitation of meetings of creditors of companies in external administration, the changes effected by the Determination are as follows:

  • meetings may be held remotely with the use of technology that gives all people entitled to attend a reasonable opportunity to participate (including a right to speak), without being physically present in the same place. These requirements should be familiar to insolvency practitioners given that r 75-30 of the Insolvency Practice Rules (Corporations) (Rules) (which the Determination modifies) already provided for the use of technology to convene meetings in multiple venues, provided that the technology was available at the venues to give all persons attending the meeting a reasonable opportunity to participate
  • votes taken at meetings must be taken by a poll using technology which allows for voting in real time and not by show of hands. The Determination also explicitly provides for (and encourages) people entitled to attend the meeting to record their vote in advance of the meeting
  • a proxy may be appointed by a person entitled to attend the relevant meeting by using technology specified in the notice of the meeting
  • the notice of meeting must explain how members can vote and ask questions. It must also include any other information they need to know to participate in the meeting using technology
  • the notice of meeting and any related information may be provided to those entitled to receive the notice of meeting using one or more technologies. Either a copy of the notice of meeting and related materials can be provided electronically or else details of how this material can be viewed online or downloaded can be provided in a communication to people entitled to attend the meeting.

However, the following features of the Determination are of more interest:

  • as noted above, the Determination contemplates a form of 'direct' voting before the meeting. The Determination provides no further detail as to how this is to be achieved. If this option is to be taken up by the convener of a meeting, the process for this voting will need to be set out in the notice of meeting. For the purposes of insolvency practitioners, the most familiar approach will likely be to invite creditors who wish to vote in advance to simply appoint the insolvency practitioner as a special proxy to vote in a specified manner
  • the ability provided by the Determination to send notices of meeting and appoint proxies electronically.

Finally, the Determination allows the new procedures to be used for meetings that have already been convened if a fresh notice of meeting is given at least seven days prior to the date of the meeting. This notice will need to set out how people entitled to attend the meeting can participate in the meeting if it is to be conducted in accordance with the Determination.

The recent amendments suggest that the government is trying to do its part to cut red tape and allow business to proceed despite COVID restrictions. While the provisions for execution of documents by companies are a particularly important change, the new concepts regarding the convening of meetings will likely be very familiar to insolvency practitioners when convening meetings of creditors.

Maddocks has produced guides on legal issues raised by the coronavirus which may be of interest, and we encourage you to share these with colleagues who may also find them useful.

Need further guidance?

Contact a member of the Restructuring & Insolvency team

Maddocks has produced guides to a range of legal issues raised by COVID-19.

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