Insolvency News COVID-19 Changes – 23/03/2020

URGENT & TEMPORARY CHANGES TO INSOLVENCY LAWS
TO HELP COMPANIES AMIDST THE COVID-19 PANDEMIC

Updated 23 March 2020

The Federal Government has announced 3 major changes to the insolvency laws to address the pandemic.

The changes were “announced in a “Fact Sheet” at www.treasury.gov.au/coronavirus.

The changes are not yet law. When they are enacted we will let you know.

We summarise the (temporary) changes here:

1). Statutory Demand Thresholds

  • The threshold for which a creditor may issue a creditor’s statutory demand for payment of debt will be increased from $2,000 to $20,000.
  • The time to comply with a statutory demand will increase from 21 days to 6 months.
  • The effect of this change will give businesses breathing space around all debts.

2). Bankruptcy Notice Threshold

  • The threshold for which a creditor may issue a bankruptcy notice for payment of debt will be increased from $5,000 to $20,000.
  • The time to comply with a bankruptcy notice will increase from 21 days to 6 months.
  • The effect of this change will give individuals breathing space around all judgement debts.

3). Insolvent Trading

  • Directors will be relieved of their duty not to trade whilst insolvent for 6 months (presumably during the pandemic).
  • In other words, directors can continue to incur debts during the pandemic even if their company is insolvent.

If you are a business owner and you or your customers are experiencing financial distress, contact Baybridge Lawyers for a chat on how to navigate the times ahead.

Baybridge can assist you in a range of insolvency matters, including:

  • applications to set aside bankruptcy notices and statutory demands
  • applications to extend convening periods
  • hearings of sequestration and winding up applications
  • public examinations by liquidators and trustees
  • applications in respect of voluntary administrations and deeds of company arrangements
  • applications to set aside unfair or insolvent transactions
  • applications to the Court for directions and judicial advice

Over the past 10 years, our insolvency partner Sundip Ghedia has conducted about 2000 cases for liquidators.

Why our clients choose us?

  • Getting franchise enquiries, but not sure what to do?
  • Are you experiencing rapid growth and market attention?
  • Is managing staff becoming a constant headache and time consuming?
  • Is your cash flow limited for funding future growth?
  • Have you proven your business concept?

Baybridge

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Christian Bird

Special Counsel | Commercial

Christian Bird brings real world experience to his role as a senior franchising and general commercial lawyer. Christian understands the commercial challenges faced by franchisors having watched his father successfully found and grow a national franchise system that has been in operation for over 30 years. As a result, he is uniquely placed to assist franchising clients with the myriad of legal challenges they face. Christian has experience working with franchisors across Australia and internationally in a range of industries.

Urgent & Temporary Changes To Insolvency Laws To Help Companies Amidst The COVID-19 Pandemic