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ARTICLE · 28 SEPTEMBER 2020

Sweeping changes to insolvency laws proposed

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The Treasurer has announced the most consequential changes to Australia's insolvency laws in 30 years.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Mitchell Waters
Mitchell Waters
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The Treasurer has announced the most consequential changes to Australia's insolvency laws in 30 years.

The changes are styled on the Chapter 11 regime utilised in the United States. It represents a significant shift from the current 'creditor-in-possession' regime to a 'debtor-in-possession' system. Incorporated entities with liabilities of less than $1 million will be able to access the scheme.

Some of the key features of the proposed scheme are:

  • business owners remain in control of their companies and will work alongside a Small Business Restructuring Practitioner (SBRP) to develop a restructuring plan over 20 business days
  • the restructuring plan is then put to creditors and creditors will vote on whether it is to be accepted within 15 business days

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This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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