Temporary restructuring relief no longer available to directors
The temporary measures implemented by the Government in March 2020 to assist companies continue to operate during the COVID-19 pandemic ended on 31 March 2021.
Directors must have acted before 31 March 2021 to have accessed the temporary restructuring relief.
The information on this page is for historical purposes only and should not be acted upon. All previous links to documents or related webpages have been removed from this page.
The information in these FAQs is a summary only, providing basic information about temporary restructuring relief. It does not cover all the relevant law regarding this topic, and is not a substitute for professional advice.
It is important directors seek advice from a trusted adviser, such as a suitably qualified financial adviser, accountant, registered liquidator or lawyer, if they are considering whether the company is eligible for temporary restructuring relief and to help you understand your legal obligations and personal liability.
Directors should be very wary of unsolicited approaches from people who offer to help restructure a company and enable the business to continue without having to pay any of the company’s debts.
If the advice you get sounds too good to be true, you should get a second opinion from another adviser.
Ask the following questions before you engage an adviser.
Is the adviser a member of a professional body and are they subject to a code of conduct?
Is the adviser regulated by ASIC, the Australian Taxation Office or another government agency?
Is the adviser listed on ASIC’s banned and disqualified persons register, or have they entered into an enforceable undertaking (you can check this on ASIC’s website where all enforceable undertakings with ASIC are kept)?
If you receive bad advice or suspect misconduct, can you give a report or make a complaint to a professional body or a regulator?
Does the adviser have the right qualifications to assist you? You may need to consider engaging separate advisers for advice about the affairs of a company, and advice about your personal financial affairs.
Note: italicised terms below contain further information in this FAQ.
The temporary measures implemented by the Government in March 2020 to assist companies continue to operate during the COVID-19 pandemic have ended.
Legislation passed in December 2020 (Corporations Amendment (Corporations Insolvency Reforms) Act 2020):
extends the temporary relief for eligible companies that access it before 31 March 2021
provides up to four months additional relief for companies seeking to appoint a restructuring practitioner.
The measures that have been extended only apply where the directors of companies eligible for temporary restructuring relief have taken steps to access the temporary restructuring relief and:
increase the amount that must be owed to a creditor from $2,000 to $20,000 before the creditor can issue a statutory demand for payment on the company
increase the time a company has to respond to a statutory demand from 21 days to six months
provide a director with a temporary safe harbour from personal liability for insolvent trading for debts incurred in the ordinary course of business before any appointment of an administrator or liquidator of the company during the period of safe harbour protection.
Directors must act before 31 March 2021 if they wish to access the temporary restructuring relief. Further information on how to access the temporary restructuring relief is provided in these FAQs.
A company can access temporary restructuring relief if, during the period 1 January 2021 to 31 March 2021, the company directors:
make the required declaration about the company’s eligibility for temporary restructuring relief
publish notice of the making of the declaration on the Published Notices Website.
For temporary restructuring relief to be effective, directors must also give ASIC a copy of their declaration no later than five business days after it is made. Further information on accessing the temporary restructuring relief is provided in these FAQs.
The period of relief only begins when the directors have made a declaration about the company’s eligibility for temporary restructuring relief and published notice of making the declaration on the Published Notices Website.
So, if the directors do not make the declaration and publish the notice until, for example, 21 January 2021, the company is not eligible for temporary restructuring relief for the period 1 January 2021 to 20 January 2021. This means the safe harbour from personal liability for directors incurring debts in the ordinary course of business is not available for the directors between 1 January 2021 and 20 January 2021, and the increased thresholds and time periods for statutory demands do not apply during that period.
Using the above example, if the notice was published on 21 January 2021, the temporary restructuring relief would last for three months until 20 April 2021, unless the initial relief period is extended.
For the temporary restructuring relief to be effective, directors must also give ASIC a copy of their declaration no later than five business days after it is made. If directors don’t do so within the five business-day period, the company ceases to be eligible for temporary restructuring relief.
The temporary restructuring relief lasts for an initial period of three months after a declaration is made and notice of the declaration is first published on the Published Notices Website.
The initial temporary restructuring relief period can be extended for a further one month in some circumstances. Further information on extending the initial relief period is provided in these FAQs.
If not extended, the declaration will expire after the initial three-month period.
Yes. A company may extend the period of temporary relief if, before the initial three-month relief period expires, they:
continue to have reasonable grounds to believe:
the company is insolvent, or likely to become insolvent
the eligibility criteria for restructuring would be met in relation to the company
the company has resolved that a restructuring practitioner for the company should be appointed
there is no external administrator appointed to the company (an external administrator includes a liquidator or provisional liquidator, administrator or administrator of a deed of company arrangement, or either another restructuring practitioner or restructuring practitioner for a restructuring plan made the company)
have taken all reasonable steps to appoint a restructuring practitioner but have been unable to do so
make a further declaration about the company’s eligibility for temporary restructuring relief
publish a notice on the Published Notices Website that the company has made a further declaration no later than two weeks before the initial three-month relief period expires
give a copy of the further declaration to ASIC no later than 5 business days after publishing the notice on the Published Notices Website.
No. There are no application fees or other fees to access the temporary restructuring relief.
The company may incur costs in seeking advice from a trusted adviser such as a financial adviser, accountant, registered liquidator or lawyer.
2. Eligibility for temporary restructuring relief
A company is eligible for temporary restructuring relief if:
the directors make a declaration (and publish notice of the declaration on the Published Notices Website) that there are reasonable grounds for the directors to believe that:
the company is insolvent, or likely to become insolvent before the declaration expires
the eligibility criteria for restructuring would be met if a restructuring practitioner were appointed on the day the declaration is published on the Published Notices Website, or on any day after that on which the declaration has not expired
the board has resolved that a restructuring practitioner for the company should be appointed
there is no external administrator appointed to the company (i.e there is no current appointment of a liquidator or provisional liquidator, administrator or administrator of a deed of company arrangement, or either another restructuring practitioner or restructuring practitioner for a restructuring plan made by the company)
the declaration described at a) above has not expired
the company has not otherwise ceased to be eligible for temporary restructuring relief
the company has not previously been eligible for temporary restructuring relief that has ceased.
The below eligibility criteria must be met on the day on which a restructuring practitioner for the company is appointed.
The total liabilities of the company do not exceed $1 million, with liabilities calculated based on any liability to pay an admissible debt or claim.
No person who is a director of the company, or who has been a director of the company within the 12 months before the appointment of the restructuring practitioner, has been a director of another company that has been under restructuring or subject to the simplified liquidation process within the period of the preceding seven years. This criterion does not apply to:
a related body corporate (Company A) of the company (Company B), if Company A is under restructuring and a restructuring practitioner was appointed no more than 20 business days before the day on which the eligibility criteria for Company B is to be met
a related body corporate (Company A) of the company (Company B) if Company A began to follow the simplified liquidation process no more than 20 business days before the day on which the eligibility criteria for Company B is to be met.
The company has not been under restructuring or subject of a simplified liquidation process within the preceding seven years.
A company may appoint a restructuring practitioner for the company if:
the eligibility criteria for restructuring are met in relation to the company on the day the appointment is made
the board has resolved to the effect that, in its opinion, the company is insolvent or is likely to become insolvent at some future time, and that a restructuring practitioner should be appointed.
The company must appoint a restructuring practitioner in writing.
An admissible debt or claim in relation to a company under restructuring is a debt or claim that would be admissible to proof against the company under section 553(1) of the Corporations Act 2001 if:
the company were wound up
the amount of the debt or claim is determined at the date a restructuring practitioner is appointed by the company
but does not include:
entitlements of an employee of the company (including superannuation contributions payable by the company) at the date a restructuring practitioner is appointed by the company
a debt or claim that is contingent on circumstances occurring after a restructuring practitioner is appointed by the company.
Note: These documents are no longer in force and no longer available. Visit EX07 - Temporary restructuring relief documents. In the Related Information section of that page you will find a Declaration of eligibility for temporary relief template. This is not an ASIC approved form but directors can consider whether to use it to make the declaration.
Directors can then complete, sign and date the declaration. Notice of the declaration will need to be published on the Published Notices Website.
A copy of the directors’ declaration must also be given to ASIC within five business days after notice of the declaration is published on the Published Notices Website, otherwise the company ceases to be eligible for temporary restructuring relief.
To publish a notice on the Published Notice Website, directors will first need to create a user account.
Once you are registered and have a user account, you can login and create and publish the notice. Use this guide to help you create and publish a notice.
The relevant notice type that you need to complete is the ‘Declaration of eligibility for temporary restructuring relief – 458E’.
There is no fee for publishing this notice.
Directors can give a copy of the declaration to ASIC through either the:
Company officeholder portal, accessible from ASIC’s website, or
Registered agent portal (by the company’s registered agent).
You must be registered to use the Company officeholder portal. There is information on the ASIC website on registering and using the Company officeholder portal.
Follow the below steps to give ASIC a copy of the declaration through the Company officeholder portal.
Access the Company officeholder portal and log in using the company ACN, user ID and password.
Select “Start new form”.
From the screen select – “EX07 – Temporary restructuring relief documents”.
Select the type of declaration being given to ASIC – for initial relief select “Copy of declaration of eligibility for temporary restructuring relief (Initial Relief)”.
Complete the other questions asked.
Attach a copy of the directors’ declaration.
Make the declaration required in the Company officeholder portal and submit the form.
Directors must first resolve that the company is eligible for extended temporary restructuring relief. This can only be done if there has been an initial period of temporary restructuring relief since 1 January 2021 which has followed the steps outlined at How do the directors make a declaration about the company’s eligibility for initial temporary restructuring relief?
Note: These documents are no longer in force and no longer available. Visit EX07 - Temporary restructuring relief documents. In the Related Information section of that page you will find a Declaration of eligibility for temporary relief template. This is not an ASIC approved form, but directors can consider whether to use it to make the declaration.
Directors can then complete, sign and date the declaration.
Notice of the declaration will need to be published on the Published Notices Website.
A copy of the directors’ declaration must be given to ASIC within 5 business days after notice of the declaration is published on the Published Notices Website, otherwise the company ceases to be eligible for temporary restructuring relief.
Directors can give a copy of the declaration to ASIC through either the:
Company officeholder portal, accessible from ASIC’s website, or
Registered agents portal (by the company’s registered agent).
You must be registered to use the Company officeholder portal. There is information on the ASIC website on registering and using the Company officeholder portal.
Follow the below steps to give ASIC a copy of the declaration through the Company officeholder portal.
Access the Company officeholder portal and log in using the company ACN, user ID and password.
Select “Start new form”.
From the screen select – “EX07 – Temporary restructuring relief documents”.
Select the type of declaration being given to ASIC – for extended relief select “Copy of declaration of eligibility for temporary restructuring relief (Extended Relief)”.
Complete the other questions asked.
Attach a copy of the directors’ declaration.
Make the declaration required in the Company officeholder portal and submit the form.
To publish a notice on the Published Notice Website, directors will first need to create a user account.
Once you are registered and have a user account, you can login and create and publish the notice. Use this guide to help you create and publish a notice.
The relevant notice type that you need to complete is the ‘Notice of extension of temporary restructuring relief period – 458E(2)’.
There is no fee for publishing this notice.
3. How does temporary restructuring relief end?
A company ceases to be eligible for temporary restructuring relief if any of the following occurs.
The initial declaration under which the company was eligible for temporary restructuring relief expires.
The directors fail to give a copy of their declaration about the company’s eligibility for temporary restructuring relief to ASIC within five business days after making the declaration.
A restructuring practitioner, voluntary administrator, liquidator or provisional liquidator is appointed to the company.
The directors make a declaration that the company is not eligible or should not be treated as eligible for temporary restructuring relief.
The court orders that the company is not to be treated as eligible for temporary restructuring relief. A creditor or ASIC can apply to the court for this order or the court can make the order on its own initiative.
4. What a director must do if they realise the company is no longer eligible for temporary restructuring relief
If the directors have made a declaration that the company is eligible for temporary restructuring relief, and the declaration has not expired, and one or more of the company directors become aware that there are not reasonable grounds to believe either or both of the following:
the company is insolvent or likely to become insolvent before the directors’ declaration of eligibility expires;
the eligibility criteria for restructuring would be met in relation to the company if a restructuring practitioner were appointed,
then the directors must, within five business days after one or more of the directors become aware of the matters at a) and, or b) above:
make a declaration in writing that the company is not eligible for temporary restructuring relief
publish notice of the declaration on the Published Notices Website
give a copy of the declaration to ASIC.
A failure to take the steps set out at c) – e) above is a contravention of a civil penalty provision of the Corporations Act 2001.
The directors may also make a declaration that the company is not to be treated as eligible for temporary restructuring relief for any other reason. If they do, the directors must:
publish notice of the declaration on the Published Notices Website
give ASIC a copy of the declaration within five business days of making the declaration.
Both types of declarations must be in writing.
ASIC provided two template documents that can be used for this purpose. These are not ASIC approved forms, so are not required to be used, but directors may use them to make the declarations. Note: These documents are no longer in force and no longer available. There is a declaration that the company is not eligible for temporary restructuring relief and a declaration that the company is not to be treated as eligible for temporary restructuring relief.
Directors can then complete, sign and date the declaration.
Directors can give a copy of the declaration to ASIC through either the:
Company officeholder portal, accessible from ASIC’s website, or
Registered agents portal (by the company’s registered agent).
To publish a notice on the Published Notice Website, directors will first need to create a user account.
Once you are registered and have a user account, you can sign into the website and create and publish the notice. Use this guide to help you create and publish a notice.
The relevant notice type that you need to complete is the ‘Declaration company not to be treated as eligible for temporary restructuring relief – 458F’.
