Business owners will gain a faster way to fend off financial collapse using new bankruptcy laws that will give them more control over how they restructure their debts and recover from the recession.
The new regime will promise a flat fee for companies that call in advisers to trade their way out of trouble, as experts predict a wave of insolvencies from forced shutdowns to halt the spread of COVID-19.
The changes will take effect as millions of employers and their workers are losing access to the $101 billion JobKeeper wage subsidy, forcing them to survive without the extraordinary taxpayer support.
In the biggest overhaul of bankruptcy law in decades, Treasurer Josh Frydenberg will embrace key features of the United States’ Chapter 11 laws that allow business owners with liabilities of less than $1 million to stay in charge while they deal with their debts.
“The reforms are a critical part of our economic recovery plan and will help to boost business confidence and dynamism across the economy by allowing viable businesses to survive as our economy rebuilds,” Mr Frydenberg said.
The changes come as Mr Frydenberg resets fiscal policy to drop old assurances about a return to surplus amid widespread estimates the October 6 budget will show a deficit of more than $200 billion.
The Treasurer will use a speech on Thursday to outline a two-step strategy that offers financial support during the recovery and is followed by a second phase that rebuilds the budget while keeping taxes low…