The Morrison Government will undertake the most significant reforms to Australia’s insolvency framework in 30 years as part of our economic recovery plan to keep businesses in business and Australians in jobs.
The reforms, which draw on key features from Chapter 11 of the Bankruptcy Code in the United States, will help more small businesses restructure and survive the economic impact of COVID-19.
Federal Member for Bonner Ross Vasta MP said the reforms would give more support to the region’s businesses that had been hit hard by the coronavirus.
“The Morrison Government is standing by small and family businesses and doing all we can to help make sure these businesses come out on the other side of this crisis,” Mr Vasta said.
“Along with early access to super, cash-flow boosts and JobKeeper, we are doing everything we can to keep family businesses up and running.”
As the economy continues to recover, it will be critical that distressed businesses have the necessary flexibility to either restructure or to wind down their operations in an orderly manner.
The reforms will assist incorporated businesses with less than $1 million in liabilities covering around 76 per cent of Australian businesses subject to insolvencies today, 98 per cent of which have less than 20 employees.
Together, these measures will reposition our insolvency system to reduce costs for small businesses, reduce the time they spend during the insolvency process, ensure greater economic dynamism, and ultimately help more local businesses get to the other side of the crisis.
Earlier this year the Morrison Government announced temporary regulatory measures to help financially distressed businesses get to the other side of COVID-19. On 7 September 2020 the Government announced a further extension of this relief to 31 December 2020.
The new processes will be available for small businesses from 1 January 2021.