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18th November, 2020

There has been a lot of press and discussion around the Government’s proposed reforms to the Corporations Act particularly with respect to streamlining the insolvency process for small businesses.

Whilst the proposed reforms have only just been tabled in parliament with an intended effective date of 1 January 2021, whether that date is achieved or not remains to be seen a more significant deadline looms.

During the early stages of the global pandemic that is COVID-19 the Commonwealth Government made amendments to the then existing Safe Harbour provisions within the Corporations Act in March 2020.

Those amendments were intended to provide relief for financially distressed businesses by providing additional Safe Harbour relief from insolvent trading claims with respect to debts incurred during the six (6)
months from March 2020 ‘in the ordinary course of the company’s business.

This temporary relief and enforcement moratorium on insolvent trading claims were due to expire on 25 September 2020, however, it was extended to 31 December 2020. Currently, there is no suggestion that a further extension will be granted.

Directors and company officers should be aware that the temporary relief afforded to directors from insolvent trading claims as outlined above only applies if a company enters into Administration or Liquidation during the current moratorium period ending on 31 December 2020.

Directors should also be conscious that the temporary amendments do not absolve directors of the duties and obligations pursuant to Sections 180 and 181 of the Corporations Act 2001 being their duty to act with care and diligence, and in good faith for the benefit of the company.

Hamilton Murphy would be pleased to discuss any aspect of the moratorium period as it draws to a close. Our partners and professional staff have extensive experience in both corporate and personal insolvency
and are available to discuss queries or concerns arising from the points raised herein.

Contact Hamilton Murphy on 03 8866 7600 or send us an email at


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