18
January
2021
|
13:10
Australia/Sydney

Act now: temporary restructuring relief for small business directors

The Australian Government introduced insolvency reforms for small businesses that came into effect on 1 January 2021, including temporary restructuring relief. These reforms extend some of the temporary measures introduced in March 2020 in response to the COVID-19 pandemic.

Act before 31 March 2021

The temporary restructuring relief gives small business directors time to consider if your company can enter a restructuring process.

The restructuring process allows eligible companies (incorporated small businesses with liabilities of less than $1 million) to:

  • retain control of the business, property, and affairs of the company while it develops a plan to restructure the company’s affairs with the assistance of a small business restructuring practitioner; and
  • enter into a restructuring plan with creditors.

The temporary restructuring relief:

  1. Stops creditors who are owed less than $20,000 (up from $2,000) from issuing a statutory demand to wind-up your company.
  2. Gives you six months to respond to any statutory demand you receive (temporary increase from 21 days).
  3. Gives you a temporary safe harbour from personal liability for insolvent trading for debts incurred in the ordinary course of your company’s business.

How to access relief

  1. Make a declaration about the company’s eligibility for temporary restructuring relief.
  2. Use this guide to publish a notice of declaration on the ASIC Published Notices site.
  3. Provide a copy of the notice to ASIC through the company portal or registered agents portal within five business days of publishing on the ASIC Published Notices site.

Seek advice

If you need help to understand the small business restructuring process, you should consider engaging a suitably qualified adviser, such as a financial counsellor, accountant, lawyer or registered liquidator.

More information and accessing relief

Boilerplate

ASIC is Australia’s corporate, markets and financial services regulator.