As many may have heard over the past 24 hours, the federal government will essentially be placing a moratorium on insolvent trading laws in a bid to help eligible businesses manage the economic challenges of the coronavirus pandemic.
The Morrison government will increase the threshold at which a creditor can issue a statutory demand (for corporate debts) from the current minimum of $2,000 to $20,000.
For bankruptcy (personal) matters, the debt required for creditors to issue proceedings will rise from $5,000 to $20,000.
Both changes will last for 6 months.
Furthermore, companies served with statutory demands will now have 6 months to respond to them, rather than 21 days.
Company directors will also obtain relief from personal liability if their company is trading whilst insolvent.
For a more thorough outline of these changes, please click here to view the fact sheet provided by the federal government.
If you would like any further assistance in this area, or if you are unsure about whether these changes will affect you, please contact us.
Francine Clancy, Senior Associate