Australia rolls back changes in insolvency laws triggered by Covid-19 from 1 January
Even as India extended the suspension of Insolvency and Bankruptcy Code till March 2021, many countries have started rolling back relaxations announced in insolvency laws owing to Covid-19. Australia has taken back the changes announced in March 2020.
In March 2020, the Australian Government announced a series of changes to bankruptcy law, as part of the wider economic response to the COVID-19 pandemic.
The temporary changes included:
- an increase in the debt threshold, which enabled creditors to apply for a bankruptcy notice
- an increase to the timeframe for a debtor to respond to a bankruptcy notice
- an increase to the temporary debt protection period available to debtors.
As of 1 January 2021, those temporary changes have ceased. An amendment has also been made to adjust the bankruptcy threshold. This means:
- the minimum amount of debt that can trigger bankruptcy is $10,000, down from $20,000
- the amount of time an individual has to respond to a bankruptcy notice is 21 days, reduced from six months
- temporary debt protection allows for 21 days relief from creditors, instead of six months.
Before the temporary changes were implemented in response to the COVID-19 pandemic, the minimum amount of debt that could trigger a bankruptcy was $5,000.
The government of Australia has amended the bankruptcy regulations to adjust the threshold for petitioning bankruptcy to $10,000 or more.
