New Small Business Insolvency Reforms from 1 January 2021

On 24 September 2020, the Treasurer announced the largest insolvency reform in 30 years for small businesses. The legislation — Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth), was recently passed by Parliament and came into effect on 1 January 2021.

The legislation had three main components:

1. Small Business Restructuring;
2. Simplified Liquidation for Small Businesses; and
3. Further Measures.

In brief, Small Business Restructuring was introduced to help eligible businesses stay in business by restructuring their debts. It provides a quicker and less complex way to deal with debts, involving the appointment of a Small Business Restructuring Practitioner (SBRP). The SBRP will work with the business to formulate and implement a restructuring plan, which must be approved by the company’s creditors. To be eligible the business must not have debts exceeding $1m. Other eligibility criteria apply.

Simplified liquidation will mean small businesses can complete liquidations quicker and at a lower cost than usual. It will only be available for creditors’ voluntary liquidation and not for members’ voluntary liquidation or court ordered liquidations. The simplified liquidation process will remove some of the red tape, such as holding meeting of creditors.

Further measures, such as electronic communications with creditors, were enacted to ensure the insolvency industry is able to communicate with creditors in a timely and cost effective manner.

Full details about the nature of these reforms can be found here.

If you would like to learn more about the new changes to insolvency laws, please contact Australian Company Liquidations on 1800 175 497. We are registered company liquidators who offer a free 24/7 insolvency hotline for Australian directors seeking expert advice.

Australian Company Liquidations (ACL) is a fully licensed and highly reputable liquidation company with a head office in Sydney. Our specialists are all registered with the Australian Securities and Investments Commission, so you can rest assured knowing that your case is being handled by experts in the field. We are not unlicensed brokers who will refer your case to external third parties to complete the liquidation.

ACL is the most affordable liquidation company in Sydney. We don’t charge hourly rates like our competitors, and
will instead negotiate a flat rate with you before you commit to the process – our liquidations start from just $3,500*. At ACL, liquidations are our specialty, meaning not only that we are highly skilled but also that our work practices have been refined and streamlined after years of experience. This results in significant cost savings, which we pass onto our customers!

That’s why we offer the cheapest liquidation prices Australia wide – guaranteed. If you happen to receive a cheaper price from another registered liquidation company in Sydney (or anywhere else in Australia), simply provide us with a written quote and we will happily beat it!

At ACL, we act fast. Once you provide us with your company’s name and ABN details, we will provide you with appointment documents within a few hours. As soon as these documents are signed by the company directors and shareholders, your business will formally be in liquidation.

Looking for obligation-free advice? Our licensed experts are just one call away. Call the leading liquidation company in Sydney today on our free 24-hour hotline at 1800 981 070.