Corporate Restructuring

Voluntary Administration

Deeds of Company Arrangement (“DoCA”)

Small Business Restructuring (“SBR”)

Our experience enables us to maximise the value for businesses and its stakeholders through the insolvency regime with a focus on business rehabilitation through Voluntary Administrations, Deeds of Company Arrangement and Small Business Restructuring.

We have been trusted by many company(s) over our 60+ years of combined experience when acting as voluntary administrators, resulting in successful restructuring and a superior outcomes for stakeholders.

Voluntary Administration

A company in financial difficulty can be placed into voluntary administration, instead of liquidation. The voluntary administration provides a process for business continuity (turnaround or saving the Company), whilst a liquidation is a terminal process that results in the winding up of the company.

The voluntary administration usually lasts around five (5) weeks, during which time the voluntary administrator takes control of the Company, investigates the affairs of the Company and provides creditors with a recommendation as to the best option for the business. This may include a proposal to creditors that enables the Company to continue in some form under a Deed of Company Arrangement.

A voluntary administrator is usually appointed by a company’s directors, after they decide that the company is insolvent or likely to become insolvent. Less commonly, a voluntary administrator may be appointed by a liquidator, provisional liquidator, or a secured creditor.

Voluntary administration provides flexibility in restructuring, negotiating outcomes with creditors and deciding the company’s future direction quickly. Other benefits include:

  • unsecured creditors can’t begin, continue or enforce their claims against the company without the administrator’s consent or the court’s permission

  • owners of property (other than perishable property) used or occupied by the company, or people who lease such property to the company, can’t recover their property

  • except in limited circumstances, secured creditors can’t enforce their security interest in the company’s assets

  • a court application to put the company in liquidation can’t be commenced

  • a creditor holding a personal guarantee from the company’s director or other person can’t act under the personal guarantee without the court’s consent.

Deed of Company Arrangement

A Deed of Company Arrangement (“DOCA”) is a formal proposal generally submitted by management (or an interested party) prior to the second meeting of creditors in a Voluntary Administration. The general reason for a proposed deed is the expectation of financial benefit to the parties compromising or modifying their rights.

The expected financial benefit may be generated by one of the following:

  • Continue trading to generate a profit for the company and the creditors through continued supply;

  • Modify creditor claims to assist with working capital to restructure the company;

  • Taxation advantages to carry forward tax losses in the corporate structure;

  • Restructure the company through a merger or reorganisation;

  • Take-over or sale of the company as a going concern;

  • Avoiding liquidation.

Should management (or an interested party) wish to submit a DOCA proposal, the terms of the proposal are at the discretion of the party submitting the DOCA. While the DOCA may include contributions over a period of time, and / or a lump sum amount on the achievement of a milestone (e.g. sale of an asset), in order to establish a Deed Fund for the distribution to creditors.

If a DOCA is proposed prior to the second meeting of creditors, the administrator will provide their opinion on the DOCA proposal in comparison to a liquidation scenario.

Creditors will then have an opportunity to vote on the future of the company, and any DOCA proposal, at the second meeting.

Small Business Restructuring

On 1 January 2021 the Federal Government made changes to the insolvency framework in Australia to better serve small businesses, their creditors and employees with the introduction of small business debt restructuring.

The process allows for financially distressed small business to access a single streamlined process for restructuring their debts, while allowing the owners to remain in control of their business.

All of our Partners are small business restructuring practitioners and with our guidance the regime can be used effectively to support small business survival, meaning better outcomes for businesses, creditors, employees and the economy.

As small business restructuring practitioners we oversee the restructuring process and work with you to develop a debt restructuring plan and restructuring proposal statement.

We appreciate the challenges for small business and have developed a cost effective framework that enables small business to restructure. This has been a challenge in the industry as restructuring has been outside the reach for many small businesses.

To be eligible for small business restructuring the company must:

  • be incorporated under the Corporations Act

  • have total liabilities which do not exceed $1 million on the day the company enters the process (excludes employee entitlements).

  • resolve that the company is insolvent or likely to become insolvent at some future time

  • appoint a small business restructuring practitioner

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Liquidations