On 24 March 2020, The Australian Federal Government gave Royal Assent to Coronavirus Economic Response Package Omnibus Act 2020, which acted as a temporary relief for burdened businesses (and Individuals), against the unexpected COVID-19 pandemic.[1] The Response Package brings with it over 80 temporary regulatory changes which aim to relief financially overburdened businesses and individuals.[2]
What is in the Response Package?
The federal government increased the monetary threshold and time frames associated with creditor issuance of Statutory Demands on companies.[3] The issuance of a statutory demands by a creditor has now been amended with temporary threshold increases from $2,000 to $20,000.[4] The time frame within which the company must respond to the statutory demand has also been temporary increased from the standard of 21 days to respond, now have up to 6 months to do so.
The federal government response package has also provided relief for individuals – as the threshold for the minimum amount of debt, which creditors can demand payment for, has been increased from its standard of $5,000 to $20,000. Furthermore, time frames within which individuals can respond has been temporarily extended from the standard of 21 Days – to now being up to 6-months.[5]
The response package had also provided temporary relief to directors from personal liability for insolvent trading.[6] With that being said, directors of a company must still avoid being dishonest and acting against the interest of their own company. Lastly, temporary relief from certain sections of the Corporations Act will be provided – as the treasurer will be given temporary instrument-making power, which would allow them to amend provisions and specific obligations.[7] These powers will similarly apply for 6 months.
Extension of Measures
On 7 September 2020, Federal Treasurer Josh Frydenberg and Attorney General, Minister for Industrial relations, Christian Porter, in a joint statement reiterated that the Morrison government will continue to provide relief for business and individuals.[8] Consequently, the insolvency and bankruptcy protections will be extended until 31 December 2020.
Considering the prediction of many health professionals and leading COVID experts – that the 4th quarter of 2020 could possibly lead to great spikes in COVID cases and deaths.[9] As such, there is possibility that the current Response Measures might be further extended into 2021 – something which we believe would be disastrous for the Australian Economy.
Although this response package is aimed at preventing a myriad of business failures, many have overlooked the fact that creditors and businesses must also be able to recover debt. In many cases such unpaid debt might also be detrimental to the creditors and their respective businesses.
How can we help?
At Irish Bentley Lawyers, we are determined to help all types of businesses and individuals, especially during these difficult times. We are Insolvency and Bankruptcy professionals – and can help you and your business regardless of the circumstances which you find yourself in.
We can help clients with –
- Contacting Businesses or Creditors;
- Recovery of Debts;
- Bankruptcy Notices;
- Statutory Demands.
- Payment Arrangements.
- Debt Negotiations.
If you have any questions or concerns, please do not hesitate to contact our office on (07) 3229 4060, or alternatively, email us at mail@Irishbentley.com.au
[1] https://business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/temporary-relief-for-financially-distressed-businesses
[2] https://joshfrydenberg.com.au/latest-news/extension-of-temporary-relief-for-financially-distressed-businesses/
[3] Coronavirus Economic Response Package Omnibus Act 2020 (Cth).
[4] Coronavirus Economic Response Package Omnibus Act 2020 (Cth), Schedule 12, Part 2.
[5] Ibid.
[6] Coronavirus Economic Response Package Omnibus Act 2020 (Cth), Schedule 12, Part 3.
[7] Section 1362A of the Corporations Act 2001(Cth).
[8] https://joshfrydenberg.com.au/latest-news/extension-of-temporary-relief-for-financially-distressed-businesses/
[9] https://bgr.com/2020/09/08/coronavirus-update-fauci-cases-usa-rising-what-states-disturbing/