Insolvency and bankruptcy protection extended
On 7 September 2020, the Federal Government announced the extension of their COVID-19 temporary insolvency and bankruptcy protections, which first came into operation on 25 March 2020. These protections have been extended until 31 December 2020, with the Federal Treasurer stating, ‘the extension of these measures will 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’.
The Federal Government will introduce further regulations to the Bankruptcy Regulations 1996 (Cth) and the Corporations Regulations 2001 (Cth) that will extend the following regulations:
- Temporary increase in the threshold, being $20,000.00, at which creditors can issue a statutory demand on a company, and the time, being 6 months, companies have to respond to the demands they receive;
- Temporary increase in the threshold, being $20,000.00, at which creditors can issue a bankruptcy notice on an individual, and the time, being 6 months, individuals have to respond to the demands they receive; and
- Temporary relief for directors from any personal liability for trading whilst insolvent.
The temporary protections were expected to expire on 24 September 2020, but will now be extended until 31 December 2020 by further regulations which will be introduced later this week.
For more specific information on any of the material contained in this alert please contact Vas Marinos on (08) 8210 1283 or vmarinos@normans.com.au or Stefanie Magliani on (08) 8217 1373 or smagliani@normans.com.au.
