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The Presumption of Insolvency for Unsatisfied Execution

Debt Recovery during COVID-19 –

It can be done!


In March 2020, the Federal Government announced temporary amendments to Australia’s insolvency laws in response to the economic consequences of the COVID-19 pandemic. The temporary amendments were set to expire in late September 2020 but have recently been extended to 31 December 2020.


These amendments, among other things, considerably limit a creditor’s ability to issue statutory demands and bankruptcy notices, as well as creating insolvent trading ‘safe harbours’ for directors. Notably, the time for compliance with creditors statutory demands and bankruptcy notices was extended from 21 days to 6 months.


Creditors are understandably frustrated at this 6 month “grace period” given to debtors. However, FEAR NOT, there are ways to take steps to wind up a company or successfully issue bankruptcy proceedings without having to wait out this 6 month period.


An Unsatisfied Enforcement Warrant will form the basis of Insolvency Proceedings


If a judgment is obtained (by default or otherwise), consideration should be given to having an enforcement warrant issued.


If one is issued by the Court and is returned wholly or partly unsatisfied, essentially meaning the debtor is unable to pay the judgment debt, the debtor will be presumed insolvent if it is a company or if the debtor is an individual, an act of bankruptcy will have been committed.


If the debtor is a company and is presumed insolvent by this process, the creditor can apply to wind up the debtor company. If the debtor is an individual and an act of bankruptcy has been committed by this process, the creditor can file a creditor’s petition (commence bankruptcy proceedings) against the debtor individual.


Don’t forget, the debt must be $20,000 or more in order to commence the bankruptcy proceedings.


With the limited use of statutory demands and bankruptcy notices during the COVID-19 pandemic, presumably due to the 6 month moratorium, enforcement warrants are an often forgotten about mechanism to form the basis of insolvency proceedings.


If you require further information or need legal advice on an insolvency related issue, please contact Tim Elliott of our office.




If you have any queries regarding this article or need legal assistance please call us on 07 5597 3366 or fill out the ‘Contact Us‘ form at the bottom of the page.

Please note that this article has been prepared by Tim Elliott, Partner at Bell Legal Group, for information purposes only. It is not legal advice nor should it be relied upon as such.