The Turnbull government is set to alter Australia’s current insolvency laws to help protect creditors and encourage entrepreneurship in the country, a move that has been welcomed by the small business community.
On Monday, the federal government handed down their National Innovation and Science Agenda, which included reducing the current three-year default bankruptcy period down to one year.
The government will also be introducing a “safe harbour” provision for directors, to protect them from liability for insolvent trading once a restructuring adviser is appointed to help turn the business around.
Legislation is also set to be introduced to make “ipso facto” clauses that terminate contracts based on insolvency unenforceable if a business is in the process of being restructured.
A paper proposing the changes is set to be released in 2016, ahead of plans to introduce the new legislation in mid-2017.
