Federal Member for Wide Bay Llew O’Brien today welcomed the most significant reforms to Australia’s insolvency framework in 30 years as part of the Morrison Government’s 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 Wide Bay small businesses restructure and survive the economic impact of COVID-19.
“As the Australian economy continues to recover, it will be critical that distressed businesses have flexibility to either restructure their debt and remain in control of their business, or to wind down their operations in an orderly manner,” Mr O’Brien said.
“These reforms give more support for Wide Bay businesses who have been hit hard by the coronavirus.
“The Morrison Government committed to doing everything we can to protect local jobs and small and family-run businesses, and these measures will help ensure as many businesses as possible come out on the other side of this crisis.”
The reforms will assist incorporated businesses with less than $1m 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.