Court absolves Virgin Australia administrators of liability over JobKeeper payments

A court has made “extraordinary” orders that absolve Virgin Australia’s administrators of liability incurred from JobKeeper payments handed out to staff employed by the collapsed airline.

A COURT has today made “extraordinary” orders absolving Virgin Australia’s administrators of liability incurred from JobKeeper payments handed out to staff employed by the collapsed airline.

The Federal Court of Australia, sitting in Victoria, today made a number of orders including that the voluntary administrators would not be held personally liable for any potential overpayments of the subsidy.

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More than 8000 of Virgin Australia’s 10,000 employees have claimed a total of $25m in JobKeeper payments, which were applied for after the company went into voluntary administration.

“The administrators seek to exclude any personal liability that they may have with respect to any possible repayment of monies advanced,” court documents said.

In submissions filed during the proceedings, it was noted: “Similarly, administrators are not well-placed to guard against unintentionally false or fraudulent representations by third parties as to their eligibility for the purposes of the JobKeeper scheme”.

The orders made in this case were deemed by Justice John Middleton to be of an “extraordinary nature” due to the COVID-19 crisis.

“I am satisfied that is the appropriate thing to do and future administrators who rely on this as a precedent will have to understand fully (the context) in which these orders are made,” he said.

Barrister for The Deputy Commissioner of Taxation Peter Hanks QC told he court the orders had been discussed between the parties and were being sought because of the “unusual situation” the company now found itself in.

More than 8000 of Virgin Australia’s 10,000 employees have claimed a total of $25m in JobKeeper payments. (AAP Image/Dan Himbrechts)

“We would want to emphasise that these orders are very peculiar to the particular situation faced by the administrators, they are a response to that situation and the challenges the administrators face, in particular, that Virgin is one of two national airline operations in Australia,” Mr Hanks said.

He said other factors that should be taken into account included that “COVID-19 has resulted in severe and ongoing restrictions in travel” and Virgin Australia employed about 10,000 staff.

Voluntary administrators were appointed to Virgin Australia on April 21.

The company has about $7bn in debt.