The Federal government has released draft legislation to amend Australia's insolvency framework for the purposes of establishing a streamlined restructuring process for small businesses. This new legislation is slated to commence on 1 January 2021.
The reforms are designed to provide a new low-cost arm to the current one-size-fits-all system that can be prohibitively expensive for small businesses seeking to restructure their affairs. It is hoped that the reforms will encourage small business directors to proactively engage with the insolvency framework earlier, thus increasing the chance of a successful restructure. This goal is commendable.
At BRI Ferrier we, unfortunately, observe numerous cases where a successful restructure may have been viable had the subject company entered external administration at an earlier juncture. In many of these instances, indicators of insolvency were not apparent to the directors, and the cost of appointing an external administrator were
