The importance of the stay on ipso facto clauses during COVID-19

COVID-19 has created a myriad of challenges for businesses in Australia, one of which is potential insolvency. Amendments to the Corporations Act in 2018 may provide relief in to companies entering into voluntary administration, receivership or a scheme of arrangement by preventing certain contracts from being terminated due to insolvency. There is a ‘stay’ on termination clauses being enforced, which may be extended due to circumstances arising from COVID-19.

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