Over the last six months, the Federal Government’s Coronavirus Economic Response Package Omnibus Act 2020 (COVID Act) has provided temporary relief to financially distressed individuals and businesses with a view to offsetting the adverse economic impact of COVID-19.
The COVID Act measures were to come to an end on 24 September 2020 but yesterday, the government announced they would be extended to 31 December 2020.
As we wrote on 24 March 2020, the COVID Act includes the following protections:
- relief to company directors from personal liability for insolvent trading where the relevant debt is incurred in the ordinary course of business prior to the appointment of an administrator or liquidator;
- an increase to the minimum debt for which a creditor can issue a statutory demand to a company from $2,000 to $20,000;
- an increase to the minimum debt for which a creditor can issue a bankruptcy notice to an individual from $5,000 to $20,000; and
- an increase to the time in which debtors must respond to a creditor’s statutory demand or bankruptcy notice from 21 days to 6 months.
In our experience, the practical effect of this debtor assistance is that creditors are not using statutory demands or bankruptcy notices even if the debt they are owed is more than $20,000. Court or QCAT proceedings are seemingly more attractive because of the 6 months that debtors currently have to respond to such demands and notices.
Whether you are a creditor or a debtor, a company or an individual, please contact our experienced Litigation + Dispute Resolution Team if you need assistance with how the COVID Act might apply to you.
Building industry amendments commence on 1 October 2020