On 24 September, the Federal Government announced a set of reforms to radically streamline the restructuring and insolvency process for small business to include a ‘Debtor in Possession’ model which will allow business owners to remain in control of their business and continue to trade whilst working with a specialist restructuring practitioner to formulate a restructuring plan to put to creditors.
The Safe Harbour framework may be your best protection in 2021, and directors need to act now to use this time to prepare a Safe Harbour framework to avoid personal liability and give their businesses the best chance of successfully navigating a transition through the uncertain COVID trading conditions.
Experts are predicting a flood of insolvencies from business who are not able to pay their bills when they fall due once the insolvent trading relieve comes to an end on 31 December 2020.
Among the large volume of business facing insolvency when insolvent trading relief is withdrawn, there will be good businesses that, under more normal circumstances, have viable business models. These businesses could thrive in the post-COVID era with access to liquidity and business turnaround skills to see them through this transition period.
