Australian Insolvency Reforms Started January 1 to Support Small Businesses

As of January 1, eligible Australian businesses experiencing financial distress can access a new, simplified debt restructuring process that allows them to restructure their existing debts while remaining in control of their business, the government said in a statement, the Australian Times reported. The reforms are aimed at repositioning the country’s insolvency system to help more incorporated small businesses – with liabilities of less than $1-million – restructure and survive the economic impact of the Covid-19 recession. “As the economy continues to recover, it will be critical that distressed businesses have the necessary flexibility to either restructure or to wind down their operations in an orderly manner,” Michael Sukkar, the Assistant Treasurer, said. An important aspect of the restructured process is that, should an eligible business not be able to immediately secure a small business restructuring practitioner to commence this new process, the business can declare its intention to access the process through a notice on the Australian Securities and Investments Commission (ASIC) published notices website. From the date a declaration is published, temporary relief from insolvent trading liability and responding to statutory demands from creditors applies to the business for up to three months. The ability to declare such an intention will be available until 31 March 2021. Read more.