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ARTICLE · 12 NOVEMBER 2020

Small business debt restructuring process: A case study

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This article focuses on what is proposed for (which may change) a new debt restructuring process for small businesses.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Paul Nogueira
Paul Nogueira
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USE THE REST OF 2020 TO PREPARE CLIENTS FOR 2021.

The Federal government's announcement1 on the significant changes to the Australian insolvency laws focuses on two areas:

  1. A new restructuring process for insolvent companies that intends to be streamlined and less complex.
  2. A new cut down or "simplified" liquidation process focused on reducing costs and increasing the return to creditors.

Subject to the legislation and regulations passing these changes will be introduced on 1 January 2021. This article will focus on what is proposed for (which may change) new debt restructuring process for small businesses.

The new debt restructuring process will be available to companies with debts less than $1 million and allows from what is referenced as a 'debtor-in-possession' model. In simple terms this means that directors can continue to trade their company's business (subject to certain control and restrictions) while undergoing the restructuring process.

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