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Schedule 12—Temporary relief for financially distressed individuals and businesses

Schedule 12 Temporary relief for financially distressed individuals and businesses

Part 1 Amendments relating to individuals in financial distress

Bankruptcy Act 1966

1  Subsection 5(1)

Insert:

default period means:

                     (a)  if a period longer than 21 days is prescribed—the prescribed period; or

                     (b)  otherwise—21 days.

statutory minimum means:

                     (a)  if an amount greater than $5,000 is prescribed—the prescribed amount; or

                     (b)  otherwise—$5,000.

statutory period means:

                     (a)  if a period longer than 21 days is prescribed—the prescribed period; or

                     (b)  otherwise—21 days.

2  Subsection 5(1) (paragraph (a) of the definition of stay period )

Repeal the paragraph, substitute:

                     (a)  the default period, beginning on that day, ends; or

3  Subsection 5(1) (at the end of paragraph (b) of the definition of stay period )

Add “or”.

4  Subsection 5(1)

Insert:

time fixed , for compliance with a bankruptcy notice, means the period specified in the notice (as required by subsection 41(2A)).

5  Subsection 33(1)

Omit “the requirements of”.

6  Subparagraph 40(1)(g)(i)

Omit “the time specified in the notice”, substitute “the time fixed for compliance with the notice”.

7  Subparagraph 40(1)(g)(ii)

Omit “fixed for the purpose”, substitute “specified”.

8  Subparagraphs 41(1)(a)(ii) and (b)(ii)

Omit “$5,000”, substitute “the statutory minimum”.

9  After subsection 41(2)

Insert:

          (2A)  The notice must specify a period for compliance with the notice. That period must be:

                     (a)  if the notice is to be served in Australia—the statutory period after the debtor is served with the notice; or

                     (b)  if the notice is to be served elsewhere—the period specified by the order of the Court giving leave to effect the service.

10  Subsections 41(5) and (6)

Omit “the time allowed for payment”, substitute “the time fixed for compliance with the notice”.

11  Subsections 41(6A) and (7)

Omit “the requirements of”.

12  Subsection 42(1)

Omit “the time allowed by the notice”, substitute “the time fixed for compliance with the notice”.

13  Paragraph 44(1)(a)

Omit “$5,000” (wherever occurring), substitute “the statutory minimum”.

14  Paragraphs 244(1)(a), (b) and (c)

Omit “$5,000”, substitute “the statutory minimum”.

15  Application of amendments

The amendments made by items 1 to 14 of this Schedule apply to the following:

                     (a)  bankruptcy notices issued on or after the commencement of this Schedule;

                     (b)  petitions and declarations presented on or after the commencement of this Schedule.

Bankruptcy Regulations 1996

16  After regulation  4.02

Insert:

4.02AA   Temporary increase to the statutory minimum and statutory period

             (1)  For the purposes of paragraph (a) of the definition of statutory minimum in subsection 5(1) of the Act, the amount prescribed is $20,000.

             (2)  For the purposes of paragraph (a) of the definition of statutory period in subsection 5(1) of the Act, the period prescribed is 6 months.

             (3)  This regulation is repealed at the end of the period of 6 months starting on the day this regulation commences.

17  After regulation  4.10

Insert:

4.10A   Temporary increase to the default period

             (1)  For the purposes of paragraph (a) of the definition of default period in subsection 5(1) of the Act, the period prescribed is 6 months.

             (2)  This regulation is repealed at the end of the period of 6 months starting on the day this regulation commences.

18  Schedule 1

After “(regulation 4.02)”, insert:

Form 1 Bankruptcy notice

19  Paragraph 1 of Bankruptcy Notice in Schedule 1

Omit “ *  days”.

20  Paragraph 1 (note) of Bankruptcy Notice in Schedule 1

Repeal the note.

Part 2 Amendments relating to businesses in financial distress

Corporations Act 2001

21  Section 9

Insert:

statutory period means:

                     (a)  if a period longer than 21 days is prescribed—the prescribed period; or

                     (b)  otherwise—21 days.

22  Paragraphs 459E(2)(c) and 459F(2)(b)

Omit “21 days”, substitute “the statutory period”.

23  Subsection 459G(2)

Omit “21 days”, substitute “the statutory period”.

24  Subsection 459G(3)

Omit “those 21 days”, substitute “that period”.

25  In the appropriate position in Chapter 10

Insert:

Part 10.42 Transitional provisions relating to the Coronavirus Economic Response Package Omnibus Act 2020

   

1669   Application of amendments made by Schedule 12 to the Coronavirus Economic Response Package Omnibus Act 2020

                   The amendments made by Part 2 of Schedule 12 to the Coronavirus Economic Response Package Omnibus Act 2020 apply to statutory demands that are served on or after the commencement of that Schedule.

Corporations Regulations 2001

26  Before regulation  5.4.01

Insert:

5.4.01AA   Temporary increase to the statutory minimum and statutory period

             (1)  For the purposes of paragraph (a) of the definition of statutory minimum in section 9 of the Act, the amount prescribed is $20,000.

             (2)  For the purposes of paragraph (a) of the definition of statutory period in section 9 of the Act, the period prescribed is 6 months.

             (3)  This regulation is repealed at the end of the period of 6 months starting on the day this regulation commences.

27  Paragraphs 3 and 5 of Form 509H of Schedule 2

Omit “21 days”, substitute “the statutory period”.

28  Form 509H (note 2) of Schedule 2

Omit “minimum of $2,000.”, substitute “minimum. The statutory minimum is $2,000 or a greater amount prescribed by the regulation s. For a 6-month period in 2020, a greater amount of $20,000 is prescribed (see the Coronavirus Economic Response Package Omnibus Act 2020 ).”.

29  Form 509H (note 5) of Schedule 2

Repeal the note, substitute:

5.         The statutory period is 21 days or a longer period prescribed by the regulations. For a 6-month period in 2020, a longer period of 6 months is prescribed (see the Coronavirus Economic Response Package Omnibus Act 2020 ).

Part 3 Temporary relief for directors from duty to prevent insolvent trading

Corporations Act 2001

30  Paragraph 588E(8A)(a)

After “subsection 588GA(1)”, insert “or 588GAAA(1)”.

31  After section 588GA

Insert:

588GAAA   Safe harbour—temporary relief in response to the coronavirus

Safe harbour

             (1)  Subsection 588G(2) does not apply in relation to a person and a debt incurred by a company if the debt is incurred:

                     (a)  in the ordinary course of the company’s business; and

                     (b)  during:

                              (i)  the 6-month period starting on the day this section commences; or

                             (ii)  any longer period that starts on the day this section commences and that is prescribed by the regulations for the purposes of this subparagraph; and

                     (c)  before any appointment during that period of an administrator, or liquidator, of the company.

             (2)  A person who wishes to rely on subsection (1) in a proceeding for, or relating to, a contravention of subsection 588G(2) bears an evidential burden in relation to that matter.

When the safe harbour does not apply

             (3)  Subsection (1) is taken never to have applied in relation to a person and a debt in the circumstances prescribed by the regulations for the purposes of this subsection.

Definitions

             (4)  In this section:

evidential burden , in relation to a matter, means the burden of adducing or pointing to evidence that suggests a reasonable possibility that the matter exists or does not exist.

32  Subsection 588GB(7) (paragraph (b) of the definition of relevant proceeding )

After “subsection 588GA(1)”, insert “or 588GAAA(1)”.

33  Paragraph 588HA(1)(a)

After “safe harbour”, insert “described in subsection 588GA(1)”.

34  Subsection 588WA(1)

Repeal the subsection, substitute:

             (1)  Subsection 588V(1) does not apply in relation to a corporation that is the holding company of a company, and to a debt, if:

                     (a)  the corporation takes reasonable steps to ensure that either subsection 588GA(1) or 588GAAA(1) (the safe harbour provision ) applies in relation to:

                              (i)  each of the directors of the company; and

                             (ii)  the debt; and

                     (b)  the safe harbour provision does so apply in relation to each of those directors and to the debt.