New bankruptcy legislation in Australia, that commenced April 22 2021, involved several amendments to modernise and reaffirm alignment with the Bankruptcy Act 1966, as part of the Government’s economic response to Covid-19.
Bankruptcy Legislation Melbourne, Sydney, Adelaide, Perth and Queensland Australia
These changes will assist to streamline and simplify bankruptcy legislation in Australia, allowing those living in Melbourne and other cities and states, such as Sydney, Adelaide, Perth and Queensland, to have better outcomes when facing this challenging situation.
Law reforms target three aspects of the existing bankruptcy legislation to assist the number of consumers and businesses in hardship – which has been rapidly increasing in the wake of the Covid-19 pandemic.
Before these changes to bankruptcy legislation, the minimum amount of debt that could trigger eligibility for bankruptcy demand was 5,000, which has now been changed to 10,000.
Permanent amendments to bankruptcy legislation include:
– Increases to debt thresholds required for creditors to apply for bankruptcy from 5k to 10k
– Increased time to respond to bankruptcy claim for debtors; from 21 days to 6 months
– Increase in time of debt protection periods available to debtors from 21 days to 6 months
This reform also includes a debt restructuring process, that allows eligible companies experiencing financial distress to access a single streamlined way of debt management.
The debt restructuring process entitles debtors to:
An increase in debt threshold required for creditors to issue a bankruptcy notice of demand, bringing it to 20,000; a larger time frame for such debtors to respond to notices and demands, and a safe harbour for directors to be protected from personal liability for insolvent trading or for debts incurred.
For more information about bankruptcy legislation and recent reforms visit pipa.net.au.