Home » Insolvency Law Update: Repeal of Covid Business Protection January 2021

Insolvency Law Update: Repeal of Covid Business Protection January 2021

Posted by Marcus McCarthy | 18 January 2021 | Corporate Finance

The COVID pandemic-driven changes to insolvency laws have finished, and it is now back to business as usual when it comes to recovery of commercial debts.

 

In March 2020, in a bid to support the economy during the pandemic, the Federal Government urgently introduced the Coronavirus Economic Response Package Omnibus Act, which provided restricted the usual debt recovery procedures under bankruptcy and insolvency laws.

  1. A Creditors Statutory Demand could only be issued to an individual debtor if the debt was over $20,000 (increased from $2,000); and
  2. The time for the debtor to pay or set aside such a Demand increased from 21 days to six months.

Similarly, the changes to Bankruptcy Notices to individuals included:

  1. A Notice could only be issued to an individual debtor if the debt was over $20,000; and
  2. The time required to comply with a Bankruptcy Notice increased from 21 days to six months from the date of receiving the Notice

These changes were automatically repealed on 1 January 2021 – meaning that the period to respond to Statutory Demands and Bankruptcy Notices has returned to 21 days and the minimum threshold for using them has returned to $2,000.

As such, it’s back to business as usual for recovering debts – although there still may be some difficulty in enforcement of bad debts in early 2021 as the economy recovers throughout 2021.

For more information about how we can help you and your business with your commercial obligations,
please contact us on support@nexuslawyers.com.au

 

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 This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues.

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