The government has given six month relief to directors for any personal liability from insolvent trading as part of its COVID-19 response.
It is clear that many companies are now struggling or will shortly start to struggle, following the restrictions and business closures arising from COVID-19 obligations.
This raises the important issue of the duties and responsibilities of company directors running those companies.
To help alleviate some of the concerns, the Federal Government is making some short term changes to company director obligations, and to rules for taking debt recovery action against companies.
The advent of COVID-19 pandemic saw Australia’s insolvent trading laws relaxed in March 2020. In essence, legislation was put in place suspending provisions that would otherwise hold directors to account for trading while insolvent. Initially these relaxed laws were to expire in September 2020, but that protection was extended until 31 December 2020.
The Australian Institute of Company Directors (AICD) has published some very helpful information on these important reforms, that you can access here.
There are multiple temporary relief measures available through different state and federal government schemes. A factsheet detailing them is available on the treasury website.
There are also a number of different packages by the federal and state governments to help assist businesses during this COVID-19 crisis. More information available here.
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