Extension of COVID-19 Relief: For Companies and Individuals

Announced Extensions

On 7 September 2020, a joint media release was made by the Treasurer Josh Frydenberg, and Christian Porter, the Minister for Industrial Relations. This announcement signalled the Federal Government’s intention to continue several COVID-19 protections introduced in late March, which operate to protect companies in financial distress from insolvency and winding up. These measures, initially introduced for 6 months, have been extended to 31 December 2020, and may be extended further.

What measures are being extended?


As part of the initial COVID-19 protections, changes were made to legislation restricting the threshold at which statutory demands can be issued on companies, and providing additional time for them to respond to any such demands received. This increased the minimum debt to $20,000 and provided 6 months to respond. It is likely as part of this extension that this 6 month period will be further extended until at least 31 December 2020.


Similarly to the matters of statutory demands, bankruptcy notices have also been increased to require a minimum debt of $20,000 and provide the respondent 6 months to respond to the notice. Following the same rationale as statutory demands, this time period may also be extended until at least the end of the year.

Insolvency Protections under the Bankruptcy Act introduced as a newer and expanded version of “Safe Harbour” provisions have also been extended. Protecting directors of companies from personal liability should they incur debts and trade while insolvent during the period of the COVID-19 pandemic. This protection is very wide in scope and protects those acting “in the ordinary course of the company’s business”, detailed in the explanatory memorandum to the Act to include all steps necessary to adapt the business to the unique challenges of COVID-19.

What does this mean?

In practical terms, this means that “the new normal” will continue in the Australian economy until at least the end of the year. Debtors will be protected from statutory demands and bankruptcy notices for the immediate future, and thousands of businesses will be protected from being wound up, or have their directors face personal liability for trading while insolvent.

The Federal Government has reiterated its support for continuing to protect Australian businesses until the end of the COVID-19 pandemic, or at least until they have had sufficient time to adapt.

Uncertain about how to navigate one or more of the support systems put in place to support Australian businesses, or in need of legal representation? Contact Gavin Parsons & Associates to discuss your legal position and options on (02) 9262 4471.


Date posted: 2020-09-09