By Kim Nguyen, Solicitor of Matthews Folbigg Lawyers, in our Insolvency, Restructuring and Debt Recovery Group.
On 15 February 2021, the Treasury released a consultation paper “Increasing the Statutory Demand Threshold” seeking submissions on the appropriateness and impacts of permanently increasing the statutory demand threshold. The consultation period expired on 5 March 2021, however, further information can be found here.
What were the temporary changes?
In response to COVID-19, Federal Parliament introduced insolvency reforms to support small businesses in financial distress. In March 2020, the Government passed the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (Coronavirus Act) which temporarily:
- Increased the statutory minimum debt(s) based on which a creditor can issue a statutory demand from $2,000 to $20,000;
- Extended the period within which the company may respond from 21 days to six months.
The purpose of the reform was said to be to reduce the pressure upon companies that were struggling to pay their debts.