Last week, the Federal Government announced proposed changes to corporate insolvency laws designed to help boost the survival rate of small businesses. The proposed changes would take effect from 1 January 2021 and aim to reduce the complexity, time, and costs involved for small businesses dealing with financial distress. This reform is in response to the economic impact of COVID-19 and allows small businesses to either restructure or alternatively streamline the liquidation process. The new procedure is a ‘debtor in possession’ model which draws on features of the US-style chapter 11 bankruptcy procedure. Essentially this means that the director of a debtor company remains in place during the relevant moratorium period and does not have to hand over control of the business to an external insolvency accountant. The process is only available to incorporated entities with liabilities of less than $1 million. Debt restructuring The overhaul of the insolvency rules is to create a new debt restructuring procedure. The process involves: The director of a small business in financial distress appoints a small business restructuring practitioner to assess…
In the current COVID-19 climate, with so many businesses facing hardship and insolvency, many businesses and individuals are looking for ways to recoup monies owed and keep their own businesses afloat despite the downturn in their debtor’s sectors
In order to combat what would seem to be a quick snatch and grab at debts, the Federal Government has announced as part of its stimulus package, that it proposes to make temporary changes to Australia’s insolvency laws to seek to combat and/or alleviate the impact the COVID-19 outbreak continues to have on individuals, businesses and significantly, the economy.
In the same way that we are all looking to solutions to keep our society protected, there are special measures that many businesses can take to ensure that they ultimately remain solvent. Madison Marcus’ Head of Restructuring and Insolvency, Gerard Breen, has examined the rapidly developing situation for businesses and what measures they can take to ensure that they survive this crisis before calling in the administrators
In view of the recent bush fires and coronavirus (COVID-19) disruption to markets across the world, business owners need to reassess their short term and medium term restructuring needs.
Company Directors need to ensure that they are aware of and compliant with the new Illegal Phoenixing Laws that were introduced this week. The new phoenix offences will prohibit creditor-defeating dispositions of company property and penalise those who engage in or facilitate such dispositions and allow Liquidators and ASIC to recover such property.