The latest release by the Government to assist businesses is outlined below.
It was important to note that if a business was a solvent entity before the onset of Covid-19, then all the measures that the Government has taken, should see the business emerge after Covid-19, as still a solvent entity.
The Government will be introducing legislation to make changes to the Companies Act to help companies facing insolvency due to COVID-19 to remain viable and keep New Zealanders in jobs.
The temporary changes include:
- Giving directors of companies facing significant liquidity problems because of COVID-19 a ‘safe harbour’ from insolvency duties under the Companies Act,
- Enabling businesses affected by COVID-19 to place existing debts into hibernation until they are able to start trading normally again,
- Allowing the use of electronic signatures where necessary due to COVID-19 restrictions,
- Giving the Registrar of Companies the power to temporarily extend deadlines imposed on companies, incorporated societies, charitable trusts and other entities under legislation, and
- Giving temporary relief for entities that are unable to comply with requirements in their constitutions or rules because of COVID-19.
“These measures will support the Government’s work to cushion the economic impact for New Zealand and to support businesses and protect jobs and incomes,” Finance Minister Grant Robertson said.
The proposed move to place existing debts into hibernation, to be known as a Business Debt Hibernation (BDH), would only happen with the agreement of 50 per cent of a business’s creditors.
The Finance Minister urged businesses to talk to their creditors and banks, and also reminded them that the Government had a Wage Subsidy scheme in place as well as a Business Finance Guarantee Scheme, which can offer loans up to $500,000 over three years.
Click here to read the official release.