You may recall that earlier in the year we sent out an alert about the changes to insolvent trading laws that were introduced in response to COVID-19. These changes were introduced to help businesses manage the economic effects of the pandemic and were originally due to expire next week on 25 September 2020.
You can access our original alert which explains the changes here.
Last month we sent out an additional alert regarding the possible extension of the moratorium on insolvency trading laws, which was supported by a number of industry bodies including the Australian Institute of Company Directors. As a result of this lobbying and in conjunction with the continuing events in Victoria, the Federal Government announced last week that it will extend the moratorium until 31 December 2020.
As a result of the extension, the increased threshold for issuing a statutory demand (currently $20,000) and the increased time period to respond to a statutory demand (currently 6 months) will continue to apply until the new end date of 31 December 2020. The extension also allows the relief provided to directors to continue to apply which releases directors from personal liability for insolvent trading and the incurrence of debts during the moratorium.
It is hoped that the extension on the moratorium will facilitate and promote some degree of economic confidence amongst the Australian community and allow businesses to continue to establish a COVID-safe environment in which to continue operating their business.
If you have any questions regarding the above, or if you require any assistance, please contact our team on (02) 4927 2900.