Finance Minister Grant Robertson says companies struggling with issues caused by Covid-19 will be able to put some debt into hibernation, under new legislation unveiled today.
Robertson said it was "inevitable that some businesses are going to go into liquidation", but the new measures would help businesses weather the storm.
The legislation - which will introduce temporary changes to the Companies Act - will:
- Give companies the option to put existing debts into hibernation until business returns to normal
- Allow the use of electronic signatures
- Allow deadline extensions for company meetings and annual returns
- Give directors of companies facing significant liquidity problems a safe harbour from insolvency duties
"These measures support the government's work to cushion the economic impact for New Zealand and to support businesses, and to protect jobs and incomes," Robertson said.
"They will also help increase certainty and provide practical assistance to business owners and directors, but they must not be seen as a workaround for the obligations that businesses have to creditors or the responsibilities of directors to act in good faith.
"Hold onto your people, give them the wage subsidy, don't make rash decisions during this time, and have a plan for coming out the other side."
- If you have symptoms of the coronavirus, call the NZ Covid-19 Healthline on 0800 358 5453 (+64 9 358 5453 for international SIMs) or call your GP - don't show up at a medical centre
Robertson said the aim was to give businesses who were looking at liquidation a moment to pause and consider whether they needed to do that.
"Having the safe harbour provision for six months means that they personally, as directors, feel confident about their liability issues - and having the possibility of putting their debts into hibernation means that their creditors can understand what their plan is on the other side.
"It's really about for those businesses not making a precipitous decision, that they don't need to go into liquidation."
He said the legislation to make these changes would be introduced to Parliament as soon as possible and would be retrospective from today.
Watch the Finance Minister latest's briefing here:
Robertson said the wage subsidy had paid out $4.8 billion in the last two weeks, helping nearly 800,000 NZers, 120,000 of whom were sole traders or self employed.
He said the best way to get the economy back to normal was to follow the public health advice, and the country was well placed to recover after the lockdown.
"Today, Moody's credit rating agency reaffirmed its highest AAA credit rating for New Zealand, saying that our economy is expected to remain resilient, backed by the government's strong fiscal management and our flexible economy."
He said the $25bn of support announced to date would cushion the blow of Covid-19 by supporting incomes, jobs and businesses and positioning the economy to recover.
"While other countries are spending billions over months and years as the pandemic found a foothold across their populations, we took action early with few cases and we're going hard now, along with injecting money directly into our economy."
Earlier Director-General of Health Ashley Bloomfield gave an update on case numbers with 71 new cases bringing New Zealand's total to 868.
He said the Ministry had now identified 10 clusters of at least 10 cases from the same source.
Worldwide cases have now passed a million.
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