Temporary relief for financially distressed businesses in response to COVID-19

The Australian Government has announced temporary amendments to defer financially distressed businesses being bankrupted or wound up.

In summary:

Companies

Threshold to issue a statutory demand has been increased from $2,000 to $20,000.
The time to pay a statutory demand to avoid winding up has been extended from 21 days to 6 months
Temporary and limited relief for directors from trading whilst insolvent

Bankruptcy

Threshold to issue statutory demand has been increased from $5,000 to $20,000
The time to pay a statutory demand to avoid bankruptcy has been extended from 21 days to 6 months

Additional information can be located at the following links

Government announcement

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_temporary_relief_for_financially_distressed_businesses.pdf

ARITA Financial distress info sheets

Directors'duties in uncertain financial times

Guidance for accountants in public practice:

Helping clients with companies fin financial distress.

8 Essential Steps if your business is in distress.

Gideon Rathner, Partner and Matthew Sweeny, Director lead the Corporate Reconstruction and Insolvency Practice. They have extensive experience in insolvencies, identifying the business drivers and reviewing and restructuring businesses in financial distress.

Should you have any questions concerning your business or your risks as a Director, please contact us.

Gideon Rathner     grathner@lowelippmann.com.au     0497 000 875

Matthew Sweeny msweeny@lowelippmann.com.au     0409 649 246

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