Small Business Restructuring In Australia

Article Summary

Small business restructuring is a formal insolvency process under Part 5.3B of the Corporations Act 2001 (Cth). It lets an eligible insolvent company with total liabilities not exceeding $1 million propose a compromise to creditors while its directors remain in control.

The company generally has 20 business days to prepare and execute a plan, and affected creditors then usually have 15 business days to vote. A plan is accepted by a majority in value of the affected creditors who vote; related creditors are excluded. Before a plan can be proposed, employee entitlements that are due and payable must be paid and required tax lodgements must be made, or the company must have substantially complied with those obligations.