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ARTICLE · 01 OCTOBER 2020

Restructuring Reforms – Will The Proposed Two Tier System Avert The Zombie Apocalypse?

Johnson Winter & Slattery
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The Treasurer has announced major proposed reforms to Australia's insolvency framework aimed at facilitating the restructuring of small to medium businesses (MSMEs) and streamlining their ...

AustraliaInsolvency/Bankruptcy/Re-Structuring
Pravin Aathreya
Pravin Aathreya
Aidan Douglas
Aidan Douglas
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The Treasurer has announced major proposed reforms to Australia's insolvency framework aimed at facilitating the restructuring of small to medium businesses (MSMEs) and streamlining their liquidation if rescue is not achievable (Reforms). The Reforms are intended to come into effect from 1 January 2021, after the suite of current insolvency protections introduced to address the economic impact of COVID-19, expire on 31 December 2020. This article focuses on the restructuring aspects of the Reforms and particularly their impact on creditors and insolvency practitioners.

The Reforms  

MSMEs have been severely impacted by COVID-19. The Reforms are designed to provide these businesses with a cost-effective and efficient mechanism to agree a restructuring plan with their creditors, without the directors relinquishing managerial control. This new restructuring process draws on the US Chapter 11 debtor-in-possession model and appears to be modelled on similar measures i

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