Update to temporary insolvency law changes
2 mins reading time
On 22 March 2020, the Federal Government announced a raft of proposed temporary changes to insolvency laws which increased the threshold and time limit for compliance for statutory demands and bankruptcy notices (see our original article). The temporary measures also provided relief for directors from any personal liability for trading while insolvent. Those measures were slated to expire on 25 September 2020.
On 7 September 2020, the Federal Government announced that the temporary regulatory relief for businesses impacted by the Coronavirus crises will now be extended until 31 December 2020. Regulations will be made to extend the temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. This will be achieved by further changes to the Corporations Regulations 2001, keeping the statutory minimum at $20,000 until 31 December and prescribing the period for the purpose of making an application to set aside statutory demands at 6 months.
Consistent with the relief provided in March and now being extended, the further changes will also extend the temporary relief for directors from any personal liability for trading while insolvent.
While the Government’s media release, “Extension of Temporary Relief for Financially Distressed Businesses”, does not specifically refer to bankruptcy notices for individuals it does refer to extending temporary bankruptcy protections so the temporary relief in respect of bankruptcy notices will be extended in a similar way to statutory demands for companies.
The aim of extending these measures is to lessen the threat of actions that could unnecessarily push businesses into insolvency and external administration at a time when they continue to be impacted by health restrictions.
Macpherson Kelley’s team of Insolvency lawyers will continue to monitor the changes in insolvency laws and provide further updates when new information is at hand.
The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.
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Update to temporary insolvency law changes
On 22 March 2020, the Federal Government announced a raft of proposed temporary changes to insolvency laws which increased the threshold and time limit for compliance for statutory demands and bankruptcy notices (see our original article). The temporary measures also provided relief for directors from any personal liability for trading while insolvent. Those measures were slated to expire on 25 September 2020.
On 7 September 2020, the Federal Government announced that the temporary regulatory relief for businesses impacted by the Coronavirus crises will now be extended until 31 December 2020. Regulations will be made to extend the temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. This will be achieved by further changes to the Corporations Regulations 2001, keeping the statutory minimum at $20,000 until 31 December and prescribing the period for the purpose of making an application to set aside statutory demands at 6 months.
Consistent with the relief provided in March and now being extended, the further changes will also extend the temporary relief for directors from any personal liability for trading while insolvent.
While the Government’s media release, “Extension of Temporary Relief for Financially Distressed Businesses”, does not specifically refer to bankruptcy notices for individuals it does refer to extending temporary bankruptcy protections so the temporary relief in respect of bankruptcy notices will be extended in a similar way to statutory demands for companies.
The aim of extending these measures is to lessen the threat of actions that could unnecessarily push businesses into insolvency and external administration at a time when they continue to be impacted by health restrictions.
Macpherson Kelley’s team of Insolvency lawyers will continue to monitor the changes in insolvency laws and provide further updates when new information is at hand.