Will NZ follow Australia? OZ insolvency laws changed for COVID-19 related financial distress
The Australian government has just announced that it is putting in place temporary measures to prevent businesses and individuals temporarily facing financial distress as a result of COVID-19 from being forced into liquidation/bankruptcy.
Given New Zealand’s insolvency/company laws are closely aligned with Australia it is likely/possible that in the coming days our Government will follow suit with a similar package.
For the full explanation See: https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_temporary_relief_for_financially_distressed_businesses.pdf
In brief:
1) The Australian Government has increased its time frame to comply with a statutory demand from 21 days to six months.
2) Statutory demand thresholds are being increased from $2000 to $20,000 for the next 6 months (NZ's threshold is $1,000)
3) The bankruptcy thresholds are being increased from $5000 to $20,000 for the next 6 months. The time frame to respond to a Bankruptcy Notice has also extended.
4) Australian Government has also announced that directors “will be temporarily relieved of their duty to prevent insolvent trading with respect to any debts caused in the ordinary cause of business”- this is relevant for reckless trading claims and is a temporary relief offered for 6 months.
Lawyers, if you are advising clients on these sort of enforcement options, best to keep their expectations aligned to what is happening overseas. NZ and Australian insolvency and corporation laws are almost identical so we suspect a similar approach might be taken. But let’s wait and see!
For advice or help on insolvency and restructuring call experienced insolvency lawyers:
Jesvin Boparoy Associate t +64 9 300 8758 | f +64 9 309 3019 Shieff Angland | Level 16 | Lumley Centre| 88 Shortland Street | Auckland [email protected] www.shieffangland.co.nz
Kalev Crossland Partner t +64 9 300 8758 | m 027 474 0835 Shieff Angland | Level 16 | Lumley Centre| 8 Shortland Street | Auckland kalev.crossland@shieffangland.co.nz www.shieffangland.co.nz