Extension of insolvency relief for financially distressed businesses

The government has announced that regulations will be made to extend the temporary increase in the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.

The changes will also extend the temporary relief for directors from any personal liability for trading while insolvent.

These measures were part of more than 80 temporary regulatory changes the government made designed to provide greater flexibility for businesses and individuals to operate during the coronavirus crisis. 

"The extension of these measures will lessen the threat of actions that could unnecessarily push businesses into insolvency and external administration at a time when they continue to be impacted by health restrictions," said Treasurer Josh Frydenberg and Attorney-General Christian Porter in a joint statement on Monday.

These changes are designed to help prevent a further wave of failures before businesses have had the opportunity to recover.

"As the economy starts to recover, it will be critical that distressed businesses have the necessary flexibility to restructure or to wind down their operations in an orderly manner," the two officials said. 

"The government will continue to help businesses successfully adapt and restructure so that they can bounce back on the other side of this crisis."