Reforms to the Australian Insolvency framework came into effect from 1st January 2021, allowing eligible businesses under financial distress to access new, simplified debt restructuring processes.
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 wind down 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.
Key Details
- The process will be available to companies with liabilities less than $1 million.
- The business will need to have paid all entitlements it owes to its employees.
- The status of tax lodgments must 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.