The changes will enable more Australian small businesses to quickly restructure
- The proposed changes would start on 1 January 2021
- CA ANZ is advocating for an in-built review and consultation process
The significant reforms to Australia’s insolvency frameworks as a part of the national recovery plan announced by the Treasurer, Josh Frydenberg, have the potential to curtail many pain points for business.
The proposed permanent changes (subject to passing of legislation) announced on 24 September 2020 would start on 1 January 2021 and include:
- A new debt restructuring process, drawing on key features of the Chapter 11 bankruptcy model in the United States, for incorporated businesses with liabilities of less than A$1 million.
- The flexibility to allow eligible small businesses to restructure their existing debts while remaining in control of their business.
- The introduction of a small business restructuring practitioner to develop a restructuring plan for eligible small business. This plan would be subject to a creditor vote.
- Access to a simpler and faster liquidation pathway at a lower cost.
- Both short- and long-term complementary measures aimed at supporting demand in the insolvency sector as well as meeting the needs of small business.
“This is a complex piece of reform which has the potential to curtail many future pain points for business but also requires very careful analysis and detailed feedback, which we look forward to continuing to provide to Treasury,” CA ANZ Business Reform Leader Karen McWilliams says.
“CA ANZ has been calling for a government response to the Australia's impending insolvency cliff and with these reforms, the government has thrown a lifeline to small businesses.
CA ANZ also considers it critical for there to be an in-built review process for late 2021 to ensure that the proposed insolvency law reforms are still fit for purpose and relevant.
Read the Treasurer’s announcement
Insolvency reforms to support small businesses recoveryRead more
Read the Government Fact Sheet
Insolvency reforms to support small businessRead more
Read CA ANZ media release
CA ANZ welcomes Insolvency reform as small business lifelineRead more