Australia’s bankruptcy laws will undergo significant reform as thousands of businesses teeter on the brink of collapse because of COVID-19.
With a wave of insolvencies predicted, the Morrison government will announce changes that would allow struggling small businesses to remain in control of their company and assets.
The US-style model will help them restructure debts, rather than immediately being placed in the hands of an administrator or creditors, the ABC reports.
The reforms are being billed as a lifeline to small businesses and the most significant reform to bankruptcy laws in almost 30 years.
More than one million Australian businesses are currently accessing the Federal Government’s JobKeeper payments which are helping prop up many that are unviable.
There are concerns in the financial sector that thousands on the brink of closure could be tipped into collapse when emergency protections for business owners expire at the end of the year.
Those COVID-invoked protections include limiting statutory demands by creditors, giving companies more time to respond to creditors’ demands and removing personal liability for trading whilst insolvent.
The reforms to be unveiled by Treasurer Josh Frydenberg on Thursday will cover around three-quarters of businesses subject to insolvencies today.
They will draw on key features of the “Chapter 11” bankruptcy code used in the United States.
Key elements of the reforms include the introduction of a new debt restructuring process for incorporated businesses with liabilities of less than $1 million.
Treasurer Josh Frydenberg told the ABC the changes would allow viable businesses to survive the recession caused by the COVID-19 pandemic.
“These are the most significant reforms to Australia’s insolvency framework in almost 30 years, and will help to keep more businesses in business and Australians in jobs,” he said.
“The Government’s new reforms draw on key features of the US Chapter 11 bankruptcy process allowing small businesses to restructure their debts while remaining in control of their business.”
Treasurer Josh Frydenberg will detail the changes in a speech to the Australian Chamber of Commerce and Industry.
South Australia’s border with NSW reopened on Wednesday night, but the good news has been tempered by new infections, a travel exemption breach and a quarantine bungle.
Queensland will also shift its border zone 100km further south from next weekend, opening the door to residents in five more NSW council areas.
The SA-NSW border restrictions were lifted at midnight after the state recorded its second day of no community transmission cases of COVID-19.
NSW residents travelling to SA will no longer have to go into 14 days of self-isolation so long as they do not enter via Victoria.
But authorities have been left red-faced after 11 Victorian family members of Port Adelaide AFL players were wrongly granted travel exemptions to enter SA. Port will host Geelong in a qualifying final at Adelaide Oval on October 1.
Chief public health officer Nicola Spurrier says the exemptions were granted by a member of SA Health’s exemptions committee who has since been counselled.
Five of the 11 who have already arrived in SA will undergo 14 days’ hotel quarantine at their own expense and then will be free to remain in the state.
The others have had their exemptions revoked.
It comes as SA recorded its first new cases in almost two weeks after a man and a woman in their 20s tested positive after arriving from Qatar on Sunday with their young child.
They are in quarantine and their child has tested negative.
A hotel security guard is being treated as a close contact and will also be forced to quarantine after potentially being exposed to the family.
On Wednesday, Victoria recorded 15 new COVID-19 cases and five more deaths, taking the state toll to 771 and the national figure to 859.
Melbourne’s crucial 14-day new case average dropped to 29.4, below the figure of 50 needed for authorities to consider easing some restrictions.
NSW recorded six new cases, all of whom were returned overseas travellers in hotel quarantine.
There were no new cases in Queensland in the 24 hours to 9am on Wednesday.
Victoria’s easing of restrictions could go further
Victorian Premier Daniel Andrews has hinted Melbourne’s coronavirus restrictions could be lifted quicker than first planned as the state slowly gets on top of its second wave.
Victoria reported just 15 COVID-19 cases on Wednesday, with Melbourne’s crucial 14-day average of new infections dropping below the 30 threshold.
It now appears certain that Melbourne will move to the next phase of the state government roadmap.
Asked on Wednesday if he was looking at going further when he announces an easing of restrictions in coming days, Mr Andrews said: “Yes, I am.”
“But I’m not in a position to give you the full list of what we’re looking at,” he told reporters.
Authorities want Melbourne’s new case average between 30 and 50 before they consider easing restrictions next Monday.
Any announcements are expected on Sunday.
Under the government roadmap announced earlier this month, the planned changes on Monday would include public gatherings being allowed for five people from two households.
Schools, child care and some workplaces would open, along with outdoor pools, while personal trainers could operate with two clients.
There could be outdoor religious services for up to five people, plus a leader.
-with AAP and ABC