Temporary relief provided to businesses and individuals experiencing financial stress, by lessening threats of legal action.
Changes effective from 25 March 2020 until 25 September 2020
- Company directors will be temporarily relieved of their duty to prevent insolvent trading. This is only for debts incurred to facilitate the continuation of the business and only for debts incurred effective from 25 March 2020 for 6 months
- Creditor’s Statutory Demand threshold has been raised from $2,000 to $20,000, for a creditor seeking to wind up a company by issuing a demand
- Increase in required time to respond to a Creditor’s Statutory Demand from 21 days to 6 months. Only applicable to Demands issued after 25 March 2020
- Ipso facto provisions included in contracts which specifically reference insolvency as a means to terminate the contractual relationship can only be effective after the 6 month period as described in point 3 above.
- The threshold required to create a Bankruptcy Notice has increased from $5,000 to $20,000.
- Increase in required time to respond to a Bankruptcy Notice from 21 days to 6 months. Only applicable to Notices issued after 25 March 2020.
All the above amendments will be repealed 25 September 2020, unless otherwise extended.
Stay tuned for more detailed information on the COVID-19 stimulus in the coming weeks.
Want to know more? Get in touch with one of the team for a comprehensive overview of what you’re entitled to.