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Effects of Temporary Amendments Made to The Australian Insolvency Laws

By Moamen Enoo
Effects of Temporary Amendments Made to The Australian Insolvency Laws

The current Covid-19 pandemic that is rattling nations ever since the start of this year is threatening lives and livelihoods. Many fields are hit hard and businesses both small and big are finding it hard to sustain during this ongoing pandemic. Many businesses, which were once profitable are in the middle of financial crisis because of the low incoming cash flow.

Insolvency laws are aimed at benefiting creditors and debtors. The creditors receive the amount they owe while debtors can either start over after settling the debts or try to restructure their company using other non-liquefying options. However, currently many companies are facing challenging situations and are at threat of facing insolvency.

How is Australia handling business downfalls amidst the pandemic?

The Australian government has come up with some temporary changes to the insolvency laws to help businesses who are in the verge of insolvency due to the pandemic. The new laws are effective since March 2020. Read through the changes if you are a business owner. Seeking expert advice would help you make appropriate business plans during this uncertain period.

Effective financial planning would protect your business. If you are worried about the downfalls in your business and seeking help with protecting your business's finances, contact the best insolvency advisors in your area. If you are looking for insolvency advice in Australia, reach out to Insolvency Experts .

They offer the best insolvency services in Australia. Their experienced insolvency practitioners would help you plan your finances during this unfortunate situation and handle the temporary low cash-flow.

Temporary amendments made to Australian insolvency laws:

From March 25 th 2020 to 6 months onwards:

  • Creditors can raise statutory demands only if the debt is $20000 or above
  • Creditors can raise bankruptcy issue only if the debt is $20000 or above
  • Debtors don't have to respond to statutory demand/ bankruptcy notice by 21 days. The duration has been extended to 6 months.
  • For the debts obtained in the ordinary course of business during this 6-month period, the director isn't personally liable for further debts incurred by an already insolvent company.
Impact of these changes: Creditors:

Creditors have to wait for 6 months to claim statutory demands for debts under $20000 in addition to waiting for 6 months to recover debts that exceed $20,000 which in turn affects their cashflow. To know information about the prospect of receiving dividends, they can contact the respective trustee/ director.


This temporary relaxation would provide temporary relief for companies that are financially affected by the pandemic. Refer to AFSA's website to check out options available to deal with personal insolvency.


Directors of companies which are facing insolvency won't have to worry about insolvency trading claims until the end of this 6-month period and they could try to restructure their company from insolvency during this period.

Go through PPSR national online register before purchasing personal property and to access information on registering security agreements before going ahead with trading. Pay close attention to the registration timing window and protect your business.

Stay away from fraudulent practitioners. Get the help of trustworthy insolvency practitioners to successfully sort out the current financial strain.

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