✦ Plain-English Summary

Corporations Amendment (Corporate Insolvency Reforms) 2020

What it does

This law makes it easier for struggling companies to restructure and recover without going into full liquidation. Instead of shutting down, eligible businesses can now work with a "restructuring practitioner" to create a plan to pay back creditors while staying in operation. Companies keep running their business while sorting out their financial problems.

Why it matters

Many viable businesses fail because insolvency laws force them into liquidation, destroying jobs and wasting productive enterprises. This gives companies a genuine second chance to reorganise their finances and survive. It also helps creditors get paid faster through an agreed plan rather than waiting years in a lengthy liquidation process.

Key details

• Restructuring practitioner role: A qualified advisor helps companies develop a recovery plan and negotiate with creditors—similar to how individuals get help with personal insolvency.
• Commencement: Most changes took effect on 1 January 2021, with virtual meeting provisions (allowing online creditor votes) effective immediately.
• Simplified liquidation: Also introduces faster liquidation procedures for small companies, reducing costs and timeline if restructuring doesn't work out.

Official Description

Amends the: Corporations Act 2001 to: establish a debt restructuring process for eligible small companies and provide temporary relief for eligible companies seeking to enter the process; and expand the situations where documents relating to the external administration of a company may be given electronically and allow documents relating to the external administration of a company to be signed electronically; and Bankruptcy Act 1966 and Corporations Act 2001 to establish a simplified liquidation process for the purpose of winding up the affairs and distributing the property of an eligible company in a creditors' voluntary winding up, as well as the requirements for entering and exiting the process. Also makes consequential amendments to seven Acts.

Committee Referrals

Senate Standing Committee for the Scrutiny of Bills

No formal division recorded

This bill passed by voice vote — parliament agreed without calling a formal count. A division is only recorded when a member explicitly requests one.

No votes yet.

No votes were recorded for this bill.