What is a Small Business Restructure?

Companies with total debt under $1M put a proposal to pay a certain amount of debt back to creditors who can vote to accept or reject the proposal. For the proposal to be accepted a majority in value of creditors must vote to accept the proposal. Note the plan can also not go for more then 3 years.

What does a proposal look like?

The proposal generally contains the following:-

The assets sold or source of funds to pay for the proposal
The amount the creditors will be repaid i.e. 70 cents in the dollar.

What amount does a proposal generally need?

Each proposal is different, however, the reforms are modeled on Part 9 Debt Agreements in the Bankruptcy Act which generally aim for a 50-70c in the dollar return to creditors. If you are looking for a more cost effective option consider a Liquidation or Voluntary Administration.

Advantages of this format?

The company and its director stay in control of company operations unlike a Voluntary Administration or Liquidator where the insolvency practitioner takes over.

Any further questions feel free to call us for a confidential, obligation free discussion on (02) 8488 3126.