Updated 22 July 2020
As part of its COVID-19 response, the Government has made changes to the Corporations Act to provide a 6 month period of relief from normal insolvent training provisions, including:
Extension of time (from 21 days to 6 months) and amount (from $2,000 to $20,000) before a ‘statutory demand’ for a debt can brought against an organisation. This means more time to manage any debts.
Directors will be relieved of their duty to prevent insolvent trading, with respect to any debts incurred in the ordinary course of business. Directors would otherwise be personally liable. Directors still need to prudently manage their co-op and should seek advice if unsure on what this means in the new context.
Generally changes to the Corporations Act insolvency provisions flow through to co-operatives registered under state or territory legislation. BCCM has written to all state and territory co-operative Registrars seeking confirmation:
- Victoria, Western Australia, South Australia and New South Wales have made a declaration to ensure the change applies for co-ops registered in those states.
- The Australian Capital Territory and Queensland have confirmed the change automatically applies for co-ops registered in those jurisdictions.
BCCM will update this fact sheet when confirmations are received in other states and territories and if this regulatory relief is extended by the government.
How can BCCM help?
- Supply chain and business continuity issues – email firstname.lastname@example.org Attn: Anthony Taylor
- Government assistance for coronavirus impacted businesses – email email@example.com Attn: Anthony Taylor
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- Go to our COVID-19 page
- Join the coronavirus member group – email email@example.com Attn: Steph Newman
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- Email firstname.lastname@example.org
This information was prepared by the BCCM. It does not constitute legal or other professional advice and should not be relied on as such. You should obtain legal or other professional advice in relation to any particular matters or concerns that you have. The BCCM does not make any claim or representation or give any warranty in relation to the document, and is not responsible for the accuracy, currency or suitability of the information in the document.