In late March 2020 in response to the rising uncertainty and distress caused by the COVID-19 pandemic, the Federal Government swiftly announced some temporary measures designed to give businesses and individuals some breathing space whilst we navigated the uncharted waters.

These measures were given royal Assent on 24 March 2020 and will be active for a period of six months commencing on 25 March 2020, or a longer period as the government may enforce as we move through these uncertain times.

They are broad brush measures that immediately took some pressure off, but are they simply delaying the 

inevitable financial pain that will come in tandem with the likely withdrawal of other measures such as JobKeeper, JobSeeker and the ATO’s cash flow boost towards the end of 2020 and beyond?

The temporary relief measures are set out below:

Changes to formal debt recovery steps & wind-up / bankruptcy

The thresholds and timeframes for both corporate and personal formal recovery steps have been amended as follows:


Issued to

Threshold change

Period to respond

Statutory Demands


$2,000 increased to $20,000

21 days changed to six months if served on or after 25 March 2020

Bankruptcy Notices


$5,000 increased to $20,000


These changes bring immediate relief from the ‘wolves at the door’ and allow business owners and individuals to consider their options without the pressure of formal demands and court appearances.

In a previous article that I wrote, many insolvency commentators were calling for an increase to the personal debt recovery threshold, citing forceful collection tactics employed by external agencies, for relatively modest debts associated with personal loans or credit cards. Might we see this temporary alteration become a permanent fixture in the personal insolvency arena?

Insolvent trading relief for directors

For a six month period commencing 25 March 2020, directors will be relieved of personal liability for debts incurred when trading whilst insolvent, on the basis that the debts are incurred in the ordinary course of conducting their business.

Having said that, the automatic relief will not apply in circumstances where debts are recklessly or fraudulently incurred by directors.

These measures are a more generous than the Safe Harbour provisions of the Corporations Act and should assist directors with keeping their doors open during the COVID-19 crisis.

Concluding comments

My observation of the pre-COVID-19 landscape here in WA was that small businesses were already doing it pretty tough. There was also a general lack of confidence and many businesses were beginning to feel the wrath of the ‘race to the bottom’ that had been gathering speed over the last few years, particularly those operating in the construction sector.

Wrapping people up in a safe bubble may relieve stress in the short term and will provide some much needed relief to viable businesses, but are these measures simply delaying the inevitable tidal wave of insolvency appointments that will build over time? Time will tell.  

Our advice to accountants and advisors is to take proactive steps with your clients to check on how they are really going – aside from the temporary stimulus measures that may see some businesses just get by from week to week.

I would think the chances of successfully offering a compromise to creditors, be it in a corporate or personal setting, would be higher in the current climate.  If those clients who were already on the edge before COVID-19 will still be there towards the end of 2020, it may be better to meet with us now to talk about their options.

About the author

Greg Quin is a Director at HLB Mann Judd Insolvency WA and has been with the team for 10 years. Greg oversees the daily operations of the many insolvency appointments managed by the HLB Insolvency team and looks after the operations of the practice.

If you have any queries about insolvency matters, please feel free to contact Greg on 08 9215 7900, 0402 943 091 or via email to


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