The Commonwealth Government has recently changed Australia’s insolvency system. The changes introduced new processes from 1 January 2021 and replace the temporary debt relief measures introduced in March 2020.
These changes aim to reduce complexity, time and costs and enable small businesses to restructure quickly in the event of insolvency. The changes include:
- A new 'debtor in possession' model, allowing the business owner to continue trading and propose a debt restructuring plan.
- A new, simplified liquidation pathway for small businesses to allow faster and lower-cost liquidation.
- Reduced investigative and reporting requirements for liquidators.
To support small businesses through these changes, the Victorian Government has multiple resources available.
These include the Business Recovery and Resilience Mentoring Program, which allows eligible business owners to receive up to four 2-hour mentoring sessions with an experienced business professional.
There is also the Partners in Wellbeing helpline, which offers free and confidential one-on-one access to wellbeing and mental health support. This telephone helpline has been expanded to provide business owners with free access to financial counsellors and will soon include a business advisory service.