The international COVID-19 Pandemic has had a significant impact on the operations and financial viability of many small businesses. Small businesses make up a large percentage of businesses in Australia and are a vital part of the economy. In response to the challenges posed, the Australian Government has introduced insolvency reforms to provide aid and assistance during this difficult and uncertain time.
Previous Insolvency Framework
As the most sweeping insolvency reforms in the last 30 years, the changes provide flexibility for small businesses seeking to restructure or wind down. [1] These changes are welcomed, as the approach outlined in Part 5.3A of the Corporations Act 2001(Cth) have been particularly complicated and expensive.
2021 Insolvency Reforms
Taking effect on 1 January 2021, The Corporations Amendment (Corporation Insolvency Reforms) Act 2020 (Cth) includes (but not limited to) the following changes:
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- Debt Restructuring Options for Small Business
- Simplified Liquidation Procedure
What small businesses are included in the reforms?
Pursuant to the reforms, a small business is defined as:
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- Incorporated Small Business (with company structure)
- Liabilities less than $1 million
We commend these reforms as these changes maximize control during the difficult process of debt restructuring and conclusion of small businesses.
If you require any assistance with managing or winding down your small business, please feel free to contact our office and speak with a Business Development Officer on (07) 3252 0011 to discuss your matter today.
Other Related Articles
https://corneyandlind.com.au/commercial-litigation/covid-19-insolvency/
https://corneyandlind.com.au/commercial-litigation/covid-19-resolving-lease-disputes/
https://corneyandlind.com.au/litigation/recession-looming-is-voluntary-administration-an-option-for-my-business/
