Businesses are facing major challenges amid COVID-19 pandemic leading to massive job cuts. In light of the challenges, the Australian Government has announced temporary changes to insolvency laws to help businesses and individuals manage the current economic crisis.

Companies: Insolvent trading

Directors will be relieved of any personal liability from their duty to prevent insolvent trading for a period of 6 months. This applies to debts incurred in the ordinary course of business and companies will still be liable for debts. Dishonesty and fraud cases will still be prosecuted.

Companies: Statutory demands

The threshold at which creditors can issue a statutory demand will be increased from $2,000 to $20,000 for a period of 6 months. Further, the time limit to respond to a statutory demand will be increased from 21 days to 6 months.

Individuals: Bankruptcy

The threshold amount for issuing a bankruptcy notice against an individual will be increased from $5,000 to $20,000. The time limit to respond to a bankruptcy notice will be increased from 21 days to 6 months. These will last for a period of 6 months.

Further information

If you would like further information, please do not hesitate to contact one of our experienced litigation solicitors on 9963 9800 or via email at law@etheringtons.com.au.