Covid-19 Temporary Relief for Financially Distressed Businesses and Individuals Extended to 31 December 2020
As COVID-19 continues many individuals, corporations and directors are under immense pressure, including being at risk of trading while insolvent or being forced to cease operations due to short-term liquidity issues.
You may recall from our previous “Important Updates for Financially Distressed Businesses” article that the Government announced temporary measures to provide relief to alleviate some of the financial hardship faced by many businesses including relief from insolvent trading duties. The Coronavirus Economic Response Package Omnibus Bill 2020 provided that relief for a 6 month period.
These temporary changes were due to expire on 25 September 2020, however, the Government has recently announced that this period will be extended to 31 December 2020.
What provisions will continue to apply?
- The minimum amount of debt for which a statutory demand may be served remains at $20,000.
- The timeframe to comply with a statutory demand remains at 6 months.
Personal Liability for Company Directors – Insolvent Trading
- A Director’s personal liability for debts incurred in the ordinary course of the company’s business continues to be on hold.
Individuals and Bankruptcy
- The minimum amount of debt owed before a creditor can initiate bankruptcy proceedings is $20,000.00.
- The timeframe for complying with a bankruptcy notice remains at 6 months.
- The timeframe for protection from an unsecured creditor taking further recovery action where a debtor has declared an intention to enter voluntary bankruptcy remains at 6 months.
How can we help?
We will keep you informed of any further changes or developments to the temporary relief measures introduced by the Government.
The individual circumstances of each case and the law at the relevant time, including these temporary relief measures, must be considered before an informed opinion can be offered but we are here to assist you.
If you have any queries regarding how these changes may impact you or your business, please contact us on 9212 1099.