Morrison Government pursuing more insolvency reform
Ahead of next week’s federal budget, the Morrison Government has decided to pursue further measures to improve Australia’s insolvency framework for businesses.
Most notably, the threshold for which a creditor can issue a statutory demand on a company will increase from $2 000 to $4 000, this change is scheduled to take effect on 1 July 2021.
Other reforms being considered are:
- Changing how trusts are treated under insolvency law;
- a review of whether Safe-Harbour provisions, introduced in 2017, should remain; and
- introducing moratoriums on creditor enforcement while insolvency schemes are being negotiated
The changes being considered will build on the reforms which came into effect on 1 January of this year that streamlined the insolvency process and provided directors with greater control to restructure or wind down their operations. These changes were subject of a prior post which you can access here.
A copy of the Treasurer’s media release issued on 3 May 2021 can be accessed here.
With insolvency becoming an evolving space, professional legal advice is key for all businesses.
