On 24 September 2020, the Government announced changes to Australia’s insolvency framework to better serve Australian small businesses, their creditors and their employees.
These reforms, which commenced on 1 January 2021, will support Australia to emerge from the pandemic with a stronger, more resilient and more competitive economy. They will help to give businesses and their creditors certainty, which is crucial to kick-starting confidence and activity as the economy transitions to the recovery phase.
Following the commencement of these reforms, the Government is consulting on whether to permanently raise the minimum threshold at which creditors can issue a statutory demand on a company.
A statutory demand is a formal demand for payment of a debt owed by a company, issued under the Corporations Act 2001.
Currently, a statutory demand can be issued on a company in relation to a debt that is due and payable and totals at least $2,000.
Written submissions are sought from stakeholders on whether the threshold should remain at $2,000, or whether it should be increased to some other amount going forward.