Federal Treasurer announces far reaching changes to insolvency laws to assist
financially distressed SME businesses recover from the COVID-19 crisis
On 24 September 2020 Federal Treasurer Josh Frydenberg announced a US-style chapter 11 'debtor in possession' insolvency regime, designed to assist SME businesses with debts of less than $1 million to restructure and avoid winding up, or where winding up is unavoidable, to provide for a lower cost, streamlined liquidation process. Schemes would be administered by a 'Small Business Restructuring Practitioner'. Full details of the scheme are still to be announced, but you can read a Fact Sheet on the scheme (current as at 24 September 2020) here.
The new measures are designed to assist the recovery of SME business enterprises from government-imposed trading restrictions, as restrictions are progressively eased and government financial support in the form of the JobKeeper and Cash Flow Boost programs are wound back . At this stage it is planned that the new arrangements will commence on 1 January 2021, subject to the enactment of legislation. IRT Advisory is closely following these far reaching developments and will be ready to assist distressed businesses take advantage of the new provisions as soon as they commence.
As always, it is important that businesses continue to proactively assess and monitor their financial situation, and seek advice at an early stage from a qualified insolvency professional. IRT Advisory has continued to operate through the COVID-19 crisis. Whether you are an SME business affected by the crisis or an advisor to such a business, please contact us for a confidential discussion.