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Aus announces major overhaul of insolvency rules
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SME Times News Bureau | 24 Sep, 2020
The Australian government on Thursday announced a major overhaul of
insolvency rules to help small businesses struggling due to the
coronavirus pandemic.
Treasurer Josh Frydenberg announced a new
two-tiered system, saying it would allow viable businesses to survive
the recession caused by the pandemic, reports Xinhua news agency.
Under
the new system, large companies that declare bankruptcy will continue
to operate under existing rules with creditors taking over to resolve
debts.
Businesses with liabilities of less than A$1 million
($707,466) will instead be subjected to an American-style model whereby
owners will remain in charge while they deal with their debts.
An
insolvent small business will be given 20 days to come up with a
restructuring plan and creditors would be given 15 days to vote on
whether to accept it.
For those that cannot be saved,
liquidators' investigative processes, reporting requirements and
mandatory meetings will be cut to make the process quicker and easier.
"The
Morrison government will undertake the most significant reforms to
Australia's insolvency framework in 30 years as part of our economic
recovery plan to keep businesses in business and Australians in jobs,"
Frydenberg said in a statement.
"The reforms, which draw on key
features from Chapter 11 of the Bankruptcy Code in the US, will help
more small businesses restructure and survive the economic impact of
Covid-19.
"As the economy continues to recover, it will be
critical that distressed businesses have the necessary flexibility to
either restructure or to wind down their operations in an orderly
manner," he added.
There has been a 46 per cent decline in the
number of Australian companies that have entered administration in 2020
with many being propped up by the government's coronavirus wage subsidy,
according to The Australian Broadcasting Corporation.
However, the government is expecting a wave of insolvencies when emergency protections begin to expire at the end of 2020.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
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75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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