New insolvency reforms

On 24 September 2020, the Government announced changes to Australia’s insolvency framework to better serve Australian small businesses, their creditors and their employees. The changes, which commenced on 1 January 2021, introduce new insolvency processes suitable for small businesses by reducing the complexity, time and costs required.

The changes will enable more Australian small businesses to quickly restructure in order to survive the economic impact of COVID-19. Where restructure is not possible, businesses can wind up faster, enabling greater returns for creditors and employees.

These reforms are the most significant changes to the Australian insolvency framework in almost 30 years. They form part of the Government’s JobMaker plan to ensure Australia emerges from the pandemic with a stronger, more resilient and more competitive economy. The need to give businesses and their creditors certainty is crucial to kick-starting confidence and activity as the economy transitions to the recovery phase.

Find out more about the simplified debt restructuring.