Further to our update sent yesterday, the stimulus package for financially distressed businesses proposed by the Government on Sunday was passed by Parliament last night.
The Coronavirus Economic Response Package Omnibus Bill 2020 (Cth) (the Bill), which is expected to come into effect from tomorrow for a period of six months to 25 September 2020, represents the most significant support for the Australian economy since World War II.
Leading up to the Bill coming into effect, it will be important for all businesses to think about what these measures mean for them in the current economic environment. Lavan’s team is ready and available to assist you in understanding the impact of the Bill and in developing a timely and strategic response.
The latest developments are:
Insolvent Trading (Companies)
- Directors will be relieved from personal liability in relation to debts incurred in the ordinary course of business but will still be held liable for debts incurred.
- Dishonesty or fraud could be subjected to criminal penalties.
- The threshold for statutory demands made by creditors has been increased from $2,000 to $20,000.
- Companies will now also be allowed six months to respond to any statutory demand (increased from 21 days).
Bankruptcy Proceedings (Individual)
- The threshold for bankruptcy proceedings brought against an individual has increased from $5,000 to $20,000.
- Further, individuals will now have six months to respond to a bankruptcy notice (increased from 21 days).
Powers of the Treasurer
- The amendments allow the Treasurer temporary powers to amend the Corporations Act as ASIC otherwise would.
- The intention is to speed up the process of applying for relief and offer the Government the ability to respond quickly to unforeseen circumstances as a result of COVID-19’s impact on businesses and the economy.
- Any change to the Corporations Act by the Treasurer will last for six months from the date of the change.
If you would like to talk to us about the relevance of these announcements to your business, please call Lawrence Lee, partner, Claire Petersen, consultant, Jeffrey Malone, special counsel, or Dan Butler, special counsel. We are very happy to discuss the meaning of these measures and any concerns you may have about the impact of COVID-19 on your organisation.