The Australian Government has announced the most significant changes to the Australian Insolvency framework in almost 30 years. These reforms have been proposed in an effort to support small business amidst the potential impact of COVID-19. The changes are proposed to take effect from 1 January 2021 and will affect incorporated businesses with liabilities of less than $1 million.
CREDIT NEWS & VIEWS
The Federal Government’s announcement that it would undertake the most significant reforms to Australia’s insolvency framework in 30 years is welcome news for many small businesses. For directors, it will be very important to carefully consider the information in the Government’s fact sheet outlining the reform process.
The Insolvency Risk Factor is the culmination of a major data analytics programme where court data was analysed against 10,000’s recent corporate insolvencies to identify the court actions most likely to lead to future insolvencies. The IRF provides a simple statistical measure of the potential impact of a company’s court actions. For example, a company with an IRF of 10 is statistically 10x more likely to become insolvent during the next 12months than a company with no court actions.
This month’s newsletter features a press release from the HIA discussing that population growth and access to housing finance will be key to Victoria’s economic recovery. There is also a lead article discussing possible implications of the temporary protections for financially distressed businesses .
Extension to Temporary Protections for Financially Distressed Businesses – Is this just delaying the pain?
Financially Distressed Businesses As anticipated, the Federal Treasury announced on the 7th of September, that the temporary protections for financially distressed businesses will be extended beyond the initial six month period to 31 December 2020. Since the introduction of these measures in April 2020, the number of construction industry related insolvencies have decreased by 65%.
This month’s newsletter features a piece on “The ‘false comfort’ of extended temporary insolvency law measures and the need for deeper structural reform” written by Scott Atkins and Kai Luck. There is also an article explaining the close working relationship that BICB has developed with AMPAC Debt Recovery to build greater awareness of each other’s services throughout the the building and construction supply sector.