Log in or register
Share on LinkedInShare on LinkedIn

ARTICLE · 02 MAY 2020

Significant changes to insolvency / bankruptcy regime

Holman Webb
Explore more from Holman Webb

In response to COVID-19 impacts, the Government introduced temporary changes to the rules of insolvency and bankruptcy.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Chris Hadley
Chris Hadley
Author LinkedIn connections

In response to the impacts of COVID-19 on the economy, the Federal Government has introduced temporary changes to rules affecting insolvency and bankruptcy processes.

Businesses and credit teams should be aware of the changes as the changes will have a significant impact on the operation of the normal credit function.

Summary of the changes are as follows:

  1. The threshold at which creditors can issue a Statutory Demand will increase from $2,000 to $20,000.
  2. The time within which a recipient of a Statutory Demand has to respond to a Statutory Demand will be extended from 21 days to 6 months;
  3. The threshold at which creditors can issue a Bankruptcy Notice will increase from $5,000 to $20,000.

We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.

Register for freeORLog in

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

View source

Related Articles

Legal Intelligence Newsletters: sign up for the latest legal and regulatory news on your chosen topics

Read more about

Related Comparative Guides

See more popular content from

Article

How Much Income Can A Bankrupt Earn?

Under Australia's bankruptcy system, there is no limit on how much income a bankrupt person can earn, though they may be required to make compulsory contributions if their after-tax income exceeds statutory thresholds. This article examines how income contribution calculations work, what thresholds apply based on the number of dependants, and why the system balances creditor interests with maintaining a reasonable standard of living for bankrupt individuals.
AustraliaInsolvency/Bankruptcy/Re-Structuring
Worrells
Worrells
Article

Voluntary Administration In Australia

Voluntary Administration under Part 5.3A of the Corporations Act 2001 offers Australian companies a formal insolvency process where an independent liquidator investigates whether the business can be preserved. During this process, most unsecured claims are stayed while creditors, employees, and secured parties navigate distinct rights and exceptions. Understanding the strategic timing for directors, the decision-making power of creditors, and the specific protections available to employees proves critical t
AustraliaInsolvency/Bankruptcy/Re-Structuring
Stonegate Legal
Stonegate Legal
Article

Trust Structures And Asset Protection During Bankruptcy

Trust structures can protect assets held for others, but they do not shield a bankrupt person's own entitlements, trustee indemnity rights, or transfers made to defeat creditors. The deed, financial records and transaction history determine whether trust property remains outside the bankruptcy estate or becomes available to creditors through beneficial interests, indemnity claims, or voidable transaction recovery.
AustraliaInsolvency/Bankruptcy/Re-Structuring
Stonegate Legal
Stonegate Legal
Article

Clawback Risks In Bankruptcy Explained

Bankruptcy trustees can challenge pre-bankruptcy transactions under sections 120, 121, and 122 of the Bankruptcy Act 1966, targeting undervalued transfers, creditor-defeating arrangements, and preferential payments. Understanding the statutory tests, timing rules, and evidentiary requirements is essential for recipients facing clawback demands, as market value alone does not guarantee protection and poor documentation can prove decisive.
AustraliaInsolvency/Bankruptcy/Re-Structuring
Stonegate Legal
Stonegate Legal
Article

Sequestration Order And Bankruptcy Notices Explained

When a creditor seeks to make an individual bankrupt through a sequestration order, the process involves strict statutory requirements including judgment thresholds, bankruptcy notices, and court scrutiny. Understanding the procedural steps, potential defects, and strategic alternatives is essential for both creditors pursuing debt recovery and debtors facing insolvency proceedings.
AustraliaInsolvency/Bankruptcy/Re-Structuring
Stonegate Legal
Stonegate Legal
Article

Recovering Company Debts Using Statutory Demands

A statutory demand is one of the fastest and most powerful tools for recovering undisputed debts from Australian companies, engaging insolvency provisions that give debtors just 21 days to respond. While it creates significant commercial pressure that often leads to payment or negotiated resolution, it must be used carefully for genuinely undisputed debts to avoid being set aside and incurring adverse costs.
AustraliaInsolvency/Bankruptcy/Re-Structuring
Stonegate Legal
Stonegate Legal