Members whose companies might not be in a sound financial situation will be pleased to learn that the Treasurer has announced earlier this month that company directors’ relief from insolvent trading measures will be extended to 31 December 2020. This is part of the Australian Government’s response to the negative impact of COVID-19 on businesses and a measure that NatRoad has been advocating for on behalf of members.
The extension means that Directors (of operating but not holding companies) will not be personally liable for insolvent trading for a period of six months, in relation to debts incurred in the ordinary course of business.
Members should take note, however, that this measure does not relieve directors of their duty to act in the best interest of their company, or if their company is insolvent or approaching insolvency, to take account of the interest of creditors. Directors should consider whether their companies are solvent and likely to continue to be solvent over a period of one, three and six months.
To support the implementation of the extension, regulations will be made to extend the temporary increase in the threshold at which creditors can issue a statutory demand on a company, and the time companies have to respond to statutory demands they receive.
To find out more how this announcement will impact your company, please visit the Treasury website.