Small Business Restructuring
From 1 January 2021 the Federal Government introduced new insolvency law reforms.
The main changes that these reforms introduced were:
Small Business Restructuring; and
Small Business Liquidation (Simplified Liquidation)
These changes can be found in the new Part 5.3B of the Corporations Act 2001 (Cth).
Small Business Restructuring:
Includes a Proposal Period (20 business days) and Acceptance Period (15 business days). The SBR Practitioner administers the fund for distribution to creditors over a maximum period of 3 years.
Eligibility Criteria:
The company must be either insolvent or likely to become insolvent
Total liabilities must not exceed $1 million
Entitlements of employees that are due and payable have been paid
Lodgements with the taxation office are up to date. Note: companies who have lodged their returns but have taxation arrears are still eligible.
The company has not undergone SBR within the previous seven years.
High Level Benefits:
Control: Directors remain in control of the company.
Expertise: The company appoints a Registered Liquidator as the SBR practitioner.
Costs: The company remains responsible for all costs and operates on a business-as-usual basis.
Efficiency: The company can restructure its debt efficiently and it is binding on all unsecured creditors, including the ATO.
Director Penalty Notice:
The director must select one of four options under a Non-lockdown DPN.
Repay the debt in full
Restructure the debt
Voluntary Administration
Liquidation
Note: The ATO no longer allows a company to enter a payment plan under a Non-Lockdown DPN to avoid personal liability. The payment plan option has been replaced by restructuring the debt.
To find out more please refer to our service offering or contact us on 02 8020 5850 or admin@hogansprowles.com.au