Coronavirus - Legal Myths Busted

Myths Concerning COVID-19 Legal Measures Impacting Creditors' Rights

A range of new measures impacting the rights of creditors have recently been introduced by the Federal Government.

In this period of rapid change and information overload, a number of misconceptions have arisen as to what legal action can be taken at this time.

More than ever, it is critical to cut through the noise in order to make smart, strategic decisions. To help make these decisions, we have separated fact from fiction below.

MYTH: You cannot commence new legal action for the period.
FACT: New legal action can be commenced in all jurisdictions nationwide.
Access to justice remains paramount. Hearings continue, albeit by telephone in many cases.

MYTH: You cannot enforce your rights as a secured creditor for the period.
FACT: There are no restrictions on secured creditors taking or enforcing securities.
Exceptions may apply to financial institutions.

MYTH: You cannot enforce a judgment during the period.
FACT: Judgments can be enforced in the usual course.
There are temporary amendments to the Corporations Act and the Bankruptcy Act in relation to statutory demands and bankruptcy notices.

MYTH: You must accept financial hardship claims without proper investigation or consideration.
FACT: Acceptance of a financial hardship application is not mandatory.
Each application should be assessed on a case by case basis and in accordance with your internal policies.

MYTH: COVID-19 is a ‘force majeure’ and automatically allows parties to escape their contractual obligations.
FACT: There is no one blanket rule as to whether COVID-19 is a force majeure event. It depends on the specific terms of the contract and the factual circumstances.

Legal advice should be obtained on a case by case basis.


Accurate information and effective strategies are essential to successfully navigate the COVID-19 landscape.

With the rapid pace of change, time is of the essence.

We welcome the opportunity to assist with any questions during this uncertain and unprecedented time.

ALSO READ: Extension of Temporary Relief for Financially Distressed Businesses

Contact Us – We are here to Help!

If you have any questions about recent amendments and what they mean for your business, please do not hesitate to contact our team. Please call 1300 757 534 or 07 3234 3200. Alternatively, you may send us a message via email at or by using our contact form.

Results Legal specialises in Debt Recovery, Insolvency Law, Commercial Disputes, Commercial Contracts, and Business Separation & Shareholder Disputes.


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