How Businesses and Individuals are Affected by the Extended Insolvency and Bankr

The government’s COVID-19 insolvency and bankruptcy laws are designed to help businesses and individuals navigate a temporary disruption to their ability to do business as normal. It extends protections over what a creditor can be owed before action taken, and thus gives small businesses (in particular) the ability to repay debts they would, in normal circumstances, have been able to afford. At Coleman Grieg, as the local Campbelltown lawyers (as well as broader western Sydney), we know local businesses will be relieved by the government’s decision to extend the temporary insolvency and bankruptcy laws to December 31, after they were initially set to expire in September.

Coleman Grieg is the local Campbelltown lawyers (serving the greater Western Sydney) area that local businesses trust. You should still engage with a lawyer as soon as possible if you’re facing insolvency or bankruptcy action, but here’s a general overview on what these changes mean for you:

Insolvency (and statutory demands):
A creditor needs to first make a statutory demand when commencing insolvency proceedings against an organisation that owes them money. This demand has previously needed to be answered with 21 days, but the COVID-19 extensions has pushed that out to six months. What’s more, where a creditor could previously issue a statutory demand when owed ,000, now the threshold is ,000. If you’re served with one of these, ask your local Campbelltown lawyers to take a look at it, as the requirements are now much higher on the part of the creditor.

Bankruptcy:
Bankruptcy – where an individual owes a creditor money – has undergone similar shifts. Creditors now need to be owed ,000 (up from ,000) before they can commence bankruptcy action, and the debtor now has six months, rather than 21 days to pay back the debt. Additionally, the period of protection for a debtor once they make the intention to present a debtor’s petition has moved to six months as well (from 21 days).
The government has taken these steps in an effort to shield businesses and individuals that would normally have been able to cover the debts until such a time that they’re able to operate again as normal. With the market still struggling with the pandemic it was necessary to extend these protections further.

Even with the longer time frame, small businesses in Campbelltown should still contact their local Campbelltown lawyers if served with one of these documents. The additional time that is given to you is not indefinite, and the sooner you take action the better for dealing with the challenge.

It’s important to understand (and a reason that you should engage with your Campbelltown lawyers immediately) that creditors can still recover debts owed to them by companies or individuals through the Courts. These alternative enforcement options which are not impacted by the proposed amendments – in other words, while you might not be subject to insolvency process, you may still find yourself challenged and in the courts by the people that you owe money to.

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Coleman Greig Lawyers Joined: March 24th, 2020