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Preventing Insolvency Post-JobKeeper

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Published by:
James Morris
Published on:
October 19, 2020
Modoras Accounting (QLD) Pty Ltd ABN 81 601 145 215
Preventing Insolvency Post-JobKeeper

Temporary insolvency and bankruptcy protections initially in place until 30 September have been extended until 31 December 2020.

With insolvencies down 60 per cent this year compared to 2019, removal of these measures could have resulted in a spike in insolvencies. How would this affect the economy? A rise in insolvencies would result in increased unemployment and a decline in consumer and business confidence.

As we’ve seen with the recent market volatility, when consumer confidence is lost, often increased volatility follows.

What are the temporary measures?

  • An increase in the amount of debt that a business can hold before a creditor can make a statutory demand for payment from $2000 to $20,000.
  • An extension in the time a debtor has to respond to a creditor demand for payment from 21 days to 6 months.
  • An increase in the time a debtor has to respond to a bankruptcy notice from 21 days to 6 months.
  • If a business decides to file for bankruptcy voluntarily, unsecured creditors will need to wait 6 months to claim against the business to recover debts as opposed to 21 days.
  • The rate of debt has increased from $5,000 to $0,000 before a creditor can initiative bankruptcy proceedings.
  • Directors are temporarily resolved of personal responsibility for trading under conditions of possible or actual insolvency (excluding cases of dishonesty or fraud).

More can be found on proposed insolvency reforms here.

Is this a time of opportunity?

Now could be a great opportunity for business development work, taking a look at cash flow or restructuring business plans to create a resilient business capable of not only surviving the pandemic but achieving growth.

Wondering how the Federal Budget announcements may affect you?

Now that the Federal Budget 2020 has been announced, you may be asking yourself, how will these changes affect me?

We’ve put together all of Budget information in one place, and included our live webinar recording where our experts discuss the key changes and possible implications and opportunities for you post-announcement.

WATCH NOW

IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.

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