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ARTICLE · 04 MARCH 2024

The implications of small business restructuring (SBR) on secured creditor claims

Worrells
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Considerations for secured creditors with a claim against a company going through the SBR process.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Phil Stark
Phil Stark
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Secured today, unsecured tomorrow: SBR essentials for secured creditors

There are some things you should know if you are a secured creditor with a claim against a company going through the Small Business Restructuring (SBR) process.

A key thing to note is that it is not an opt in/out process. What debts are included in an SBR are set out by law. Even if you take no action, the SBR process could affect your rights to enforce your debt.

Only the estimated shortfall of your debt is included.

ALLPAAP creditors

If you hold security over all of the assets of the company (an ALLPAAP security), you are required to estimate the value of all the company's assets should they be sold. This could be a complicated process depending on the assets and business of the company. There is also no guidance on who has the last say on the valuation should there be a disagreement.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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