Recent insolvencies in the industry may cause industry members concerns about their own business financial stability. The simplified debt restructuring process may help your business out of trouble.
Small businesses with less than $1 million of total liabilities can access a simplified debt restructuring process. This allows owners to survive and thrive while remaining in control of their businesses.
To be eligible, a company must:
- Be incorporated under the Corporations Act (registered with ASIC as a company).
- Have total liabilities of less than $1 million. Liabilities exclude employee entitlements.
- Not been under restructuring or been the subject of a simplified liquidation process within the preceding 7 years.
- Not have a director or a former director (within the 12 months preceding the day on which the restructuring practitioner is appointed) who has been a director of another company that has been under restructuring or subject to a simplified liquidation process within the preceding 7 years.
- Have paid out all employee entitlements that are payable and ensure all tax lodgements are up to date.
During the simplified debt restructuring process, you may conduct your business as usual while a Small Business Restructuring Practitioner (SBRP) assists you in preparing a debt restructuring plan (Plan) to be put forward to your creditors. The Plan identifies how your creditors would be repaid and is accompanied with a restructuring proposal statement setting out the amounts owed by the company.
Within 20 business days of entering the process, you must submit the Plan to the creditors. The creditors have 15 business days to accept or reject the Plan. For a Plan to be accepted, more than 50 percent of eligible creditors must accept the Plan.
Once the Plan is made, payments will be disbursed in accordance with the terms in the Plan. The business is released from all debts or claims once all obligations under the Plan have been completed.
For more information, members may refer to HIA’s information sheet ‘Insolvency reforms to support small business’.
For further information HIA has a team of Workplace Advisers who are available to assist members. To speak with a HIA Workplace Adviser or for details on becoming a member call 1300 650 620.
Craig Jennion
HIA Executive Director – Hunter