The Corporations Amendment (Corporate Insolvency Reforms) Bill 2020 has been passed by both houses and is awaiting Royal Assent. Background.
UPDATE: Royal Assent given on 15 December 2020.
Corporations Amendment (Corporate Insolvency Reforms) Regulations 2020.
The purpose of the Bill is to implement insolvency reforms to support small business. The three key elements of the reforms are:
- small business restructuring: a new formal debt restructuring process in the corporations Act for eligible incorporated small businesses, which the Government has indicated will apply to businesses with liabilities of less than $1 million, to allow a faster and less complex process to restructure existing debts and maximise their chances of survival;
- small business liquidation: a new simplified liquidation pathway in the Bankruptcy Act for eligible incorporated small businesses, which the Government has indicated will apply to businesses with liabilities of less than $1 million, to provide for a faster and lower cost liquidation process; and
- to provide temporary insolvency relief until 31 March 2021—to address the issue of eligible small businesses not being able to access the process immediately whilst insolvency practitioners become familiar with small business restructuring.
These provisions will commence on 1 January 2021.
Additionally, the Bill amends the Corporations Act to expand the situations where documents relating to the external administration of a company may be given electronically. These provisions commence on the day after Royal Assent.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.