Temporary relief for financially distressed businesses

On 22 March 2020, the Australian Government announced measures to assist businesses with the impact of the current economic conditions arising from the COVID-19 pandemic. These measures were passed on 23 March 2020, as a result, there have been some amendments to the Corporate and Personal Insolvency Laws to afford debtors some temporary relief over the next 6 months. An overview is outlined in the table below:

Area	Implemented Changes
Corporate Insolvency – issuing of Statutory Demands and Winding up applications	Statutory Demands are able to be issued in the usual course, however, changes have been made to the monetary threshold and the time for debtors to respond. The monetary threshold to issue a Statutory Demand will be increased from $2,000 to $20,000. This means that there must be at least $20,000 owing at the time of issue and at the time of filing any winding up application. The time to comply (i.e. attend to payment or negotiate a suitable payment plan) will be increased from 21 days to 6 months
Personal Insolvency – issuing of Bankruptcy Notices and Creditor’s Petitions	Bankruptcy Notices are able to be issued in the usual course, however, changes have been made to the monetary threshold and the time for debtors to respond. The monetary threshold to issue a Bankruptcy Notice will be increased from $5,000 to $20,000. This means that there must be at least $20,000 owing at the time of issue and at the time of filing any Creditor’s Petition. The time to comply (i.e. attend to payment or negotiate a suitable payment plan) will be increased from 21 days to 6 months.  The above changes will be in place for the next 6 months.
Insolvent Trading	Temporary relief for directors in relation to insolvent trading over this 6 month period. It will not exempt insolvent trading liability prior to this period. Egregious cases of fraudulent or dishonest insolvent trading may still attract criminal actions.