$20k court wind-ups and 6 months to respond

Mix of my LinkedIn Articles from Sunday 22/3/2020 and Monday 23/3/2020 …

BREAKING 22/3/2020: The government has just announced (in its stimulus package) an increase to the threshold at which a creditor can take action to initiate insolvency from $2,000 to $20,000 and giving companies six months instead of 21 days to respond.

It probably means that suppliers that trade on credit terms will need to reduce trade limits and get credit insurance.

Link to more details – https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_temporary_relief_for_financially_distressed_businesses.pdf

Need to see the details, but these measures are only temporary and will expire in 6 months time … starting and finishing dates to be advised.

But rightly or wrongly the Court Liquidation market is now smashed to smithereens.

Insolvent trading law under the Corporations Act also won’t apply to directors for at least the next 6 months. … these initiatives also apply to bankruptcy law too.

BREAKING 23/3/2020: these amendments will apply only to those statutory demands SERVED on or after the COMMENCEMENT of the Coronavirus Economic Response Package Omnibus Bill 2020.

See proposed section 1669 of the proposed Bill.

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This is the same for the abolition of insolvent trading for 6 months (see proposed section 588GAAA).

588GAAA

STARTING DATE = the day after the Bill receives Royal Assent (which I imagine will be this week).

I assume that the Bill will not be changed, but it is in line with what I was expecting.

insolvency SVVoidables covid19

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