To assist with the ongoing economic recovery from COVID-19, rules allowing affected businesses to put their debt on hold have been extended by 10 months.
“New Zealand’s economy is recovering better than we expected, but the impacts of the pandemic are far-reaching and some businesses need continued support to keep trading,” Finance Minister Grant Robertson said.
“To help companies that are struggling due to COVID-19, we are keeping the business debt hibernation scheme open until 31 October 2021.
“The Government introduced the scheme earlier this year as part of relief measures aimed at cushioning the economic impacts of the pandemic. The scheme allows businesses that meet the necessary criteria to place their existing debts on hold for up to seven months.
“This is intended to give businesses time to explore options for continuing to trade, when they might otherwise have been liquidated by their creditors,” Grant Robertson said.
Commerce and Consumer Affairs Minister David Clark said preventing insolvencies means retaining jobs and cashflow in the economy.
“Business debt hibernation gives some breathing space to businesses that are doing it tough. It means when creditors start applying pressure, company directors have the support of a tailored mechanism to work through options with their creditors to find a way forward.
“This is a good outcome for not only company owners but also their employees, creditors and the wider economy.
Grant Robertson said debt hibernation is not designed to prevent companies with no realistic prospect of continuing to trade from going under.
“Safeguards are also in place to protect against abuse of the measure, including the requirement for creditors to vote on a business’s proposal.”