Threshold debt amount for issuing Statutory Demands to increase to $4000.00

The Federal Government has announced proposed further changes to Australia’s insolvency laws. These changes will add to the multitude of legislation changes introduced over the previous year which have been discussed in our earlier articles.

Bankruptcy Law – Temporary debt relief measures ended on 1 January 2021

Insolvency Law – Changes to statutory demands from 1 January 2021

A significant change for creditors chasing debts from corporate entities is a permanent increase in the threshold at which creditors can issue a statutory demand. The threshold will increase from $2,000 to $4,000. Confirmation of the date from which this increase will apply is still to be announced.

With a view to “further simplifying and streamlining insolvency law”, the Federal Government will also:

• consult on the treatment of ‘trading trusts’ under insolvency law.
• review the ‘safe harbour’ provisions to determine whether they remain fit for purpose. These provisions were introduced in 2017.
• consult on improvements to schemes of arrangement, including a moratorium on creditor enforcement while such schemes are being negotiated.

We will continue to monitor the proposed changes to insolvency law and the government’s consultation process and provide further information as it eventuates.