Watch Out for New Insolvency Laws in 2021

By Petr Vrsecky
Business Recovery and Insolvency Partner
09 December 2020
  • Insolvency
  • Restructuring
  • Australian Government REforms
  • Buisness Recovery
  • COVID-19

Given the end of COVID-related Government relief and the upcoming insolvency reforms, ARITA is receiving an unusually high level of enquiries from non-members, about how they can ‘get in’ to the ARITA membership. ARITA continues to hold its members to the highest standards during what could be a busy and tough several years of insolvency.

The new legislation is now before Parliament and on course to become effective on 1 January 2021.

These laws aim to allow for:

  • A new “simplified” small business restructuring process, so small businesses can restructure their debts whilst directors remain in control of the business.
  • A less costly process than the current Voluntary Administration regime for small businesses.

Small Business Restructuring will be useful where your client has assets or a viable business to protect. The company must have employee entitlements paid up and companies will need to have all tax lodgements up to date. If you have clients contemplating utilising these new laws, ensure their lodgements are up to date.

If the laws that come out in 2021 are properly considered and drafted then simplified liquidations should be cheaper than a standard liquidation. But the employee and lodgement requirements may end up being prohibitive.

At PKF, we provide a free advisory service and a range of solutions to companies, directors, public accountants, lawyers, creditors and individuals. Being an ARITA member means we have the specific education, experience, knowledge and leadership it takes to skillfully and fairly operate during the impending insolvency tsunami.