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New insolvency rules commence

The measures from 1st January 2021 apply to incorporated companies with liabilities less than $1 million.

 
For those businesses that are “unable to survive”, a new simplified “liquidation pathway” will apply for small businesses to allow faster and lower-cost liquidation.
 
To be eligible to access this new process a company must:
 
  • have total liabilities which do not exceed $1 million on the day the company enters the process – this excludes employee entitlements;
     
  • appoint a small business restructuring practitioner to oversee the restructuring process, including working with the business to develop a debt restructuring plan and restructuring proposal statement.
 
This principle has the potential to allow continuation of a longer term successful businesses hit by short-term or COVID cash flow difficulties.
 
 
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