The Federal Government has announced urgent changes to insolvent trading laws to provide companies with the confidence to continue to trade during the Covid-19 crisis that currently grips the world.
One key change is to temporarily relieve directors, for six months, of the risk of being held personally liable for insolvent trading by the company.
Others include a 10 times increase to the minimum debt amount necessary to seek the winding up of an insolvent company (from $2,000 up to $20,000) and pushing out the period to satisfy any statutory demand from 21 days to 6 months. These are significant and vital amendments given that almost overnight we have seen widespread and deeply damaging developments across almost all markets and sectors.
The ATO has also released information on temporary arrangements (including tax rebates and deferred payments) being introduced to respond to the economic crisis and new Government economic measures are being announced almost daily to try and preserve jobs and allow companies to ride out the storm.
Legal, accounting and financial advisors are needing to update their advice on a daily basis as new measures are announced and new impacts are felt from the virus measures.
Cove Legal provide specialist advice to clients facing possible insolvency outcomes or facing actual or threatened ATO debt action. If you are attempting to address director personal liability issues or an insolvency situation generally, either now or in the future, do get in contact as we would love to try and help.
Roger Blow, Principal, P: +61 8 6381 0326 or E: roger@covelegal.com.au
This publication is not intended to provide and does not provide legal advice. You should seek professional legal advice relating to your specific situation(s) before taking any action based upon its contents.