The federal government has extended insolvency and bankruptcy protections until the end of the year as it seeks to stem the shock of a national recession.
Those protections, first implemented in March, temporarily increased the threshold for which creditors can make a statutory demand and provided temporary relief from personal liability for directors trading while insolvent.
Analysis from Business News in July indicated these measures had largely been effective, with just 29 businesses entering into administration in April.
In a joint statement from Treasurer Josh Frydenberg and Attorney-General Christian Porter, Messrs Frydenberg and Porter said the extension would lessen the threat of actions that could push businesses into insolvency or administration at a difficult economic time.
“As the economy starts to recover, it will be critical that distressed businesses have the necessary flexibility to restructure or to wind down their operations in an orderly manner,” they said.
“The government will continue to help businesses successfully adapt and restructure so that they can bounce back on the other side of this crisis.”
Response to the changes have so far been positive, with Australian Small Business and Family Enterprise ombudsman Kate Carnell wecloming the announcement, noting however that the changes would likely keep many unviable businesses afloat.
She said she would continue to advocate for a small business viability voucher program, with vouchers valued at up to $5,000 for failing businesses to access if neccessary.
“The voucher would ensure small businesses have access to the expertise they need to judge business viability," Ms Carnell said.
“Unfortunately small businesses with cash flow issues, compounded by falling revenue, may not seek out professional advice because it’s deemed to be unaffordable.
"This could prove to be devastating for the business owner and their family down the line.
“We know the sooner a small business owner experiencing financial stress seeks assistance from an accredited professional, the better the outcome.”
More to come.
