Interim insolvency protections extended – Financial Standard

Small businesses suffering financial hardship as a result of COVID-19 will have temporary insolvency and bankruptcy protections in place until the end of the year.

The federal government has extended temporary insolvency and bankruptcy protections until 31 December 2020.

The law is helping reduce the threat of creditors taking action against small businesses. It is also extending the temporary relief for directors from any personal liability for trading while insolvent.

Issuing a statutory demand is a typical way for a creditor to take action to wind up or liquidate a company, according to solvency management firm Worrells. Once a statutory demand expires, the creditor can commence court proceedings to wind up a company.