UPDATE | Changes to statu­to­ry demands from 1 Jan­u­ary 2021

Marc Bad­dams and Sean Green­wood pro­vide an update fol­low­ing on from the recent arti­cle Changes to statu­to­ry demands from 1 Jan­u­ary 2021 post­ed on 23 Decem­ber 2021.

Update

The Cor­po­ra­tions Amend­ment (Cor­po­rate Insol­ven­cy Reforms) Act 2020 (Cth) (the Act), com­menced on 1 Jan­u­ary 2021. The Act pro­vides, among oth­er things, that for a three month peri­od from 1 Jan­u­ary 2021 to 31 March 2021, an eli­gi­ble small busi­ness will be able to declare its inten­tion to access a new small busi­ness restruc­tur­ing process (itself part of the Act) to its cred­i­tors through ASIC’s pub­lished notices website. 

Fol­low­ing such a dec­la­ra­tion, the exist­ing tem­po­rary insol­ven­cy relief that was place until the end of 2020 (relief from insol­vent trad­ing lia­bil­i­ty under sec­tion 588GAAA of the Cor­po­ra­tions Act 2001 (Cth) and the restric­tions on the issu­ing of statu­to­ry demands) would then apply to the busi­ness for a max­i­mum peri­od of three months (or four months if the com­pa­ny has obtained an exten­sion), until they are able to access a small busi­ness restruc­tur­ing prac­ti­tion­er or oth­er insol­ven­cy prac­ti­tion­er. The com­pa­ny will cease to be eli­gi­ble for the tem­po­rary relief fol­low­ing the expiry of this time peri­od, if the direc­tors with­draw the dec­la­ra­tion, or if the com­pa­ny enters exter­nal administration.

As not­ed above, this addi­tion­al peri­od of relief only begins when the direc­tors have made a dec­la­ra­tion about the company’s eli­gi­bil­i­ty for tem­po­rary restruc­tur­ing relief and pub­lished notice of mak­ing the dec­la­ra­tion on the ASIC’s pub­lished notices web­site. So, if the direc­tors of an oth­er­wise eli­gi­ble com­pa­ny do not make a dec­la­ra­tion and pub­lish a notice until (say) 1 Feb­ru­ary 2021, the com­pa­ny will not be eli­gi­ble for tem­po­rary restruc­tur­ing relief for the peri­od 1 Jan­u­ary 2021 to 31 Jan­u­ary 2021. This means the increased thresh­olds and time peri­ods for statu­to­ry demands ($20,000 and 6 months respec­tive­ly) will not apply dur­ing that period.