Small Business Restructuring

Does your company face liquidation or voluntary administration? What is the alternative for an insolvent business?

Company restructuring (also known as the small business restructuring process) is a relatively new process for restructuring insolvent companies that have total debts of less that $1m. There are three key criteria for qualification for company restructuring under part 5.3B of the Corporations Act:

1. up-to-date company tax lodgements
2. up-to-date employment entitlements and
3. total liabilities of less than $1m.  

The company restructuring process is less expensive than voluntary administration and to date it has had much higher success rates. We help our clients to prepare a restructuring plan and take the appointment as ASIC registered liquidators to propose this plan to creditors. If creditors vote in favour of a restructuring plan this will result in the reduction of total unsecured debts and a payment plan.

What can a Restructuring Plan give a business?

• Whilst the restructuring process runs the directors remain in control of the business (in contrast to voluntary administration)
• A moratorium from creditor action whilst the process is on foot
• If approved by creditors a significant reduction in unsecured debt (including tax debt) that is owed by a company 
• Time to pay a compromise amount (up to 3 years)
• Business continuity through the same company structure 
• Removal of any risk of insolvent trading action through a liquidation process 
• To date the restructuring process has had a much higher success rate than voluntary administration

You can…

• Take advantage of Company Restructuring by engaging a Restructuring Practitioner.
• Avoid a liquidation fire sale through a successful Company Restructuring plan.
• Get an evaluation about whether it is feasible to rescue your business from liquidation through Company Restructuring by contacting Sewell & Kettle.