Insolvency reform declarations due

Written by: Institute of Certified Bookkeepers

From 1st January 2021, eligible businesses experiencing financial distress can access a new, simplified debt restructuring process that allows them to restructure their existing debts while remaining in control of their business.

The reforms are intended to reduce the cost of external administration for small businesses and the compliance burden for insolvency practitioners, thereby assisting more businesses to remain viable or increasing returns to creditors and employees in situations where they are not salvageable.

The process allows financially distressed small businesses to access a single, streamlined process to restructure their debts, while allowing the owners to remain in control of their business. This will support more small businesses to survive, meaning better outcomes for businesses, creditors, employees, and the economy.

To access this relief, a business can declare intention to access the restructuring process by publishing the declaration on the published notices website from 1st January 2021. A company’s period of temporary restructuring relief begins on the day the declaration is published. A business will also need to notify ASIC within 5 business days that they have made this declaration. The form for doing this is available on the ASIC website from 1st January 2021. The ability to declare intention to access the restructuring process is available until 31st March 2021.

Treasury have released a comprehensive fact sheet explaining the process of application and eligibility.