Small business owners facing insolvency due to the economic fallout of COVID-19 will benefit from legislative changes to Australia’s insolvency framework announced by Federal Treasurer Josh Frydenberg today.
The changes, which will take effect from 1 January 2021, are intended to help small business owners stay trading and keep more people in jobs.
Canberra Business Chamber CEO Graham Catt said today that “a significant portion of the ACT’s 30,000 businesses currently rely on financial support. Restrictions have wiped out or severely reduced revenue.”
“Combined with mounting debt, much of which has been delayed rather than waived, the harsh reality is that many small business operators are at – or will become – risk of becoming insolvent.”
“Small business owners are already stressed about revenue loss and mounting debt. The stress will only increase over the next few months as deferrals of loans, rents and payroll tax come to an end.”
“Under the current legislation, small business owners stand to lose everything – the family home used to guarantee the business as well as their life savings. The new measures announced today mean they have the space to restructure their debts and, if necessary, their business, and negotiate directly with creditors before the administrators are called in.”
“Hopefully, it will provide small business owners with breathing space to pay their debts and trade out of their situation. And for those who can’t continue operating, our hope is that the new arrangements will allow unviable businesses to make a to close, sit down with their creditors and negotiate an outcome that enables them to walk away with dignity, and some of their assets intact.”