Small Business Restructuring
If you are a small business experiencing financial distress and are worried about the prospect of liquidation, this may be the option for you. A small business restructuring plan can be implemented while you remain in control of the business.
Eligibity
To be eligible for a Small Business Restructuring plan, your company must have:
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total liabilities of less than $1 million (excluding employees)
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no outstanding employee entitlements that are due and payable
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no outstanding tax lodgement obligations
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not have been subject to a restructuring or simplified liquidation process within the preceding seven years (exemptions apply)
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no current or former (within the previous 12 months) director subject to a small business restructuring or simplified liquidation process within the preceding seven years
Process
The small business restructuring process enables eligible companies to put a proposal to creditors to compromise their debts. It includes the following steps:
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A Restructuring Practitioner (RP), who must be a registered liquidator, is appointed by resolution of directors;
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The directors prepare a proposal (i.e. restructuring plan) for creditors to consider and vote on; when developing the plan and preparing the required information for creditors, the directors receive assistance from the RP;
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During the restructuring period, directors remain in control of the company and the company can continue to trade;
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Creditors vote on the plan;
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If accepted (by majority in value of creditors), the restructuring plan is implemented and the terms of the plan must be complied with; (there are consequences if the plan is not complied with that may impact the future of the company);
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If the plan is completed, the company is released from all debts subject to the plan (it does not include debts incurred whilst continuing to trade after the appointment of the RP) and is able to continue in operation.