Earlier in the year we sent out an alert about the changes to insolvent trading laws that were introduced in response to COVID-19. The main change to come out of this was the introduction of a moratorium on insolvent trading laws to help businesses manage the economic effects of the pandemic.
You can access our original alert here.
The moratorium was due to end next month, however, many industry bodies including the Australian Institute of Company Directors have been calling for the moratorium to be extended since the situation in Victoria started escalating in June. The extension is considered necessary to prevent hundreds of companies from entering into insolvency and to stop countless jobs being lost, at least temporarily.
In response to these calls, it was announced last week that the Federal Government is now considering extending the moratorium on director liability for insolvent trading until at least the end of the year.
The moratorium has already helped a significant amount of small to medium businesses continue trading through the pandemic where they would have otherwise been forced into insolvency if the moratorium had not been in place. It is expected that extending the moratorium will allow many more businesses to do the same.
The extension has not been formally announced by the Federal Government at this stage and we’ll keep you updated once the extension comes into effect.
If you have any questions regarding the above or require assistance please contact our Commercial Team on (02) 4927 2900.
