Home featured Credit: Evan Wise Featured News Small Business Featured Government announces ‘most significant reforms’ to insolvency laws for small businesses Ann Wen September 24, 2020 The Federal Government has announced new insolvency rules that will allow small businesses to stay afloat whilst restructuring debts. This new insolvency regime is proposed to start from 1 January 2021, following the lifting of temporary insolvency measures introduced in March 2020. R elated: Government extends temporary insolvency and bankruptcy protections Incorporated businesses with liabilities less than $1 million may retain control of their company and assets without having to go into administration. Large companies remain bound by existing insolvency rules. “This $1 million threshold will cover about 76 per cent of businesses subject to insolvencies today, 98 per cent of which have less than 20 full-time employees,” said Treasurer Josh Frydenberg. Insolvent small businesses have 20 days to produce a restructuring plan. Creditors will then vote on whether to accept it within 15 days. There is a moratorium on unsecured and some secured creditors taking action against the company whilst it is restructuring. This will help small businesses who are in financial distress due to COVID-19 but are still regarded as viable. “These are the most significant reforms to Australia’s insolvency framework in almost 30 years, and will help to keep more businesses in business and Australians in jobs,” said Frydenberg. “The reforms are a critical part of our economic recovery plan and will help to boost business confidence and dynamism across the