This comes on top of the changes that came into force from January 1 that simplified the restructuring and liquidation process for small firms, providing directors greater control to either restructure or wind down their operations.

"As Australia's economy rebuilds, it's important that as many businesses as possible have the opportunity to turnaround, restructure and survive," Mr Frydenberg said.

"That's why the Morrison government is committed to building on our already significant insolvency reforms, keeping more businesses in business and driving Australia's economic growth."

In the next phase, the government will consult on how trusts are treated under insolvency laws, and whether the so-called insolvent trading safe-harbour provisions that were introduced in 2017 remain fit for purpose .

It is also considering the introduction of a moratorium on creditor enforcement while insolvency schemes are being negotiated.

"A flexible, streamlined insolvency system will help more businesses in distress get to the other side of this crisis," Assistant Treasurer Michael Sukkar said.

In the meantime, and following consultations in February and March, the government will increase the threshold at which creditors can issue a statutory demand on a company from $2000 to $4000.

This will help prevent distressed but viable companies from being pushed into liquidation over small debts.

Australian Associated Press