Aus­tralia’s le­gal changes to help firms dur­ing cri­sis

Arab News - - Business News -

Aus­tralia on Thurs­day un­veiled its big­gest shakeup in bank­ruptcy laws in nearly three decades, al­low­ing small busi­nesses to trade while in­sol­vent and take more con­trol over debt re­struc­tur­ing, in a bid to help firms through the coro­n­avirus cri­sis. The new rules will help man­age an ex­pected avalanche of in­sol­ven­cies when wage sub­si­dies wind down next year.

Un­der the pro­posed rule changes, busi­nesses with li­a­bil­i­ties of less than A$1 mil­lion ($708,000) will be able to keep oper­at­ing for 20 busi­ness days while they come up with a debt re­struc­tur­ing plan, rather than be placed in the hands of ad­min­is­tra­tors.

The changes, ef­fec­tive from Jan. 1, 2021, aim to move the sys­tem “to a more flex­i­ble debtor in pos­ses­sion model,” Fed­eral Trea­surer Josh Fry­den­berg said in a state­ment.

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