This morning the Federal Government announced it will continue to provide regulatory relief for businesses impacted by COVID-19 by extending temporary insolvency and bankruptcy protections until 31 December 2020.

These measures, originally set to expire on September 30, include:

Bankruptcy changes

  • Increase in the minimum debt threshold for a creditor-initiated bankruptcy procedure from $5,000 – $20,000;
  • The time to respond to a bankruptcy notice increased from 21 days to 6 months;
  • An extension of the protection period for individual’s declaring an intention to present a debtor’s petition extended from 21 days to 6 months.

Insolvency Changes

  • Increase in minimum amount for a statutory demand from $2,000 – $20,000;
  • Increase in time to respond to a statutory demand from 21 days to 6 months;
  • Temporary suspension of directors’ personal liability for insolvent trading for six months (egregious cases of dishonesty will still attract criminal liability);
  • Insertion of s 588GAAA which provides an additional temporary safe harbour provision during the six-month period.

Treasurer Josh Frydenberg commented that “the extension of the temporary changes to the insolvency and bankruptcy laws will continue to provide businesses with a regulatory shield to help them get across to the other side of the crisis.”