Insolvency Reforms for Small Businesses comes into Effect
Reforms to Australian Insolvency framework have come into effect from 1st January 2021. It will allow eligible businesses under financial distress to gain access to new, simplified debt restructuring process, or in case restructuring is not possible, they will be able to winddown faster and with lower cost for liquidation process.
The changes are aimed at supporting Australia to emerge from the pandemic with a much stronger, resilient, and more competitive economy by providing businesses and their creditors, a level of certainty.
The process will be available to companies with liabilities less than $1 million. And in-order-to avail the process, the business will need to have paid all entitlements it owes to its employees and have the status of tax lodgments to be current.
The simplified liquidation process will relieve the businesses from certain processes relating to ASIC reporting, meetings, and appointment of liquidators and committees of inspection.
The reforms are concurrent to the end of temporary insolvency protections that were in place as a response to the pandemic in March last year.
Please feel free to contact your trusted advisor at Vivid Partners should you have any questions about how these measures will affect you.
Vivid Partners
08 6270 2876
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The material contained in this publication is for general information purposes only and does not constitute professional advice or recommendation from Vivid Partners. Regarding any situation or circumstance, specific professional advice should be sought on any particular matter by contacting your advisor at Vivid Partners.