This is an update to our previous insight article Major short-term changes to Australian insolvency regime which discussed the introduction of Parts 2 and 3 of Schedule 12 (Temporary Measures) to the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (Act) on 23 March 2020. The Temporary Measures are aimed at assisting struggling companies by allowing them more time to pay debts and the possibility of obtaining credit while insolvent.
On 6 September 2020, the Federal Government announced that the Temporary Measures made under the Act have been extended. They were originally due to expire on 25 September 2020 but will now continue in full effect until 31 December 2020.
This means the increased threshold of $20,000 for issuing a Statutory Demand will continue, and the timeframe within which companies must pay amounts in a Statutory Demand will remain capped at 6 months rather than 21 days. Directors will also continue to be relieved of personal liability for insolvent trading where debts were incurred in the ordinary course of business.
Mark Farquhar and Peter Clay from our litigation and insolvency team regularly deal with issues relating to dealing with distressed companies. We would be happy to assist you further with these issues and with commercial disputes more generally.