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ARTICLE · 10 SEPTEMBER 2020

Treasury confirms insolvency safeguards extended

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New measures will relax insolvency and bankruptcy laws to assist businesses and individuals facing financial distress.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Mitchell Waters
Mitchell Waters
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In March 2020, the Australian Government introduced new measures to relax the laws relating to insolvency and bankruptcy to assist businesses and individuals who may be facing financial distress.

Today, the Federal Government confirmed that these protections will now remain in force until 31 December 2020. We summarise the safeguards below:

  • directors will be relieved of their personal liability for insolvent trading. However, egregious cases of dishonesty and fraud will still be subject to criminal penalties
  • the minimum threshold for a creditor to issue a statutory demand to a debtor company will remain at $20,000 (originally at $2,000)
  • the period in which a debtor company has to respond to a statutory demand will remain at six months (originally within 21 days)

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