Insolvency relief to be extended to 2021

Insolvency relief to be extended to 2021

The Government has announced it will extend the temporary insolvency relief in a bid to give viable businesses the opportunity to recover from the economic crisis of 2020.

The move will see the temporary relief extended until 31 December 2020.

The decision to extend the temporary relief, which was due to expire at the end of September 2020, comes in an attempt to prevent further job losses and avoid another massive hit to the economy.

“The extension of these measures will lessen the threat of actions that could unnecessarily push businesses into insolvency and external administration at a time when they continue to be impacted by health restrictions. These changes will help to prevent a further wave of failures before businesses have had the opportunity to recover,” said Josh Frydenberg.

“As the economy starts to recover, it will be critical that distressed businesses have the necessary flexibility to restructure or to wind down their operations in an orderly manner. The Government will continue to help businesses successfully adapt and restructure so that they can bounce back on the other side of this crisis.”

The temporary relief measures include:

Statutory Demands

  • The minimum threshold for creditors to issue a statutory demand on a company has been increased from $2,000.00 to $20,000.00.
  • The time-frame for a company to respond to a statutory demand has been increased from 21 days to six (6) months.

Bankruptcy Proceedings

  • The minimum amount of debt required for a creditor to seek the issue of a bankruptcy notice against a debtor has been extended from $5,000.00 to $20,000.00.
  • The time-frame for a debtor to respond to a bankruptcy notice has been increased from 21 days to six (6) months.
  • The period of protection a debtor receives after making a declaration of intention to present a debtor’s petition has been increased from 21 days to six (6) months.

Insolvent Trading

  • Directors will be relieved of their duty to prevent insolvent trading with respect to any debts incurred in the ordinary course of the company’s business during the period in which the interim relief measures are in effect.

Hunt & Hunt Lawyers national insolvency team will continue to monitor the changes to insolvency laws and provide further updates as new information becomes available.

Please contact Hunt & Hunt Lawyers if you require further information, or to discuss your specific circumstances

Related article

Temporary changes to insolvency laws amid the COVID-19 pandemic


Jessica Egger, Lawyer
Matt Gauci, Partner


  7 Sep 2020, The Hon Josh Frydenberg MP & The Hon Christian Porter MP joint media release, ‘Extension of Temporary Relief for Financially Distressed Businesses’