New insolvency rules commence

Important changes to Australia’s insolvency laws commenced operation on 1 January 2021. The measures apply to incorporated businesses with liabilities less than $1 million and are expected to cover around 76 per cent of businesses currently subject to insolvency. The new rules do not apply to partnerships or sole traders.

The Treasury’s Simplified Debt Restructuring factsheet states the conditions that companies need to satisfy to be eligible to access this new process. In addition, ASIC confirms that for a debt restructuring, a company is required to make a declaration that it is eligible, which must be published on the ASIC site (and a copy given  to ASIC). There is also an ASIC Q&A on the new rules.