Debtor-in-possession restructuring model delivered courtesy of
COVID-19.
The proposed new insolvency reforms to support small business
look set to be rushed through Parliament, touted to commence 1
January 2021. Details of the proposed changes can be found
here:
Insolvency Reforms fact sheet.
A new category of insolvency practitioner, a Small Business
Restructuring Practitioner ("SBRP"), will help company
directors prepare a business restructuring plan, certify the plan
to creditors and oversee disbursements once accepted. The new debt
restructuring process adopts a 'debtor-in-possession'
model, allowing directors to retain control of the business and
assets while creditors consider the restructuring proposal. If more
than 50 percent of creditors in value vote in favour, the plan is
accepted (related-party creditors are excluded from voting). It is
expected this will lead to reduced costs of the process when
compared to the current voluntary administration
