Simplified debt restructuring is a new process available as of 1 January 2021 to support financially distressed small businesses. In simplified debt restructuring, an independent professional known as a ‘small business restructuring practitioner’ is appointed to a distressed debtor company to assist with restructuring the company’s debt via development of a ‘restructuring plan’.
The safe harbour is a carve-out to the duty of company directors to cease trading when a company is insolvent. It is a pro-business mechanism that helps companies stay afloat by giving directors protection from prosecution for insolvent trading while they work on a restructure. Read our guide to the safe harbour to find out more about this potential lifeline for insolvent companies.
A zombie company is a business that barely scrapes by and is always short of cash. The problem with zombie companies is that they can be easily tipped over the edge into insolvency when something goes wrong. Read our article to learn more about the signs, symptoms and consequences of zombie companies.
The Government is using its currently massive political capital to push through a revolution in SME insolvency law in Australia. Their aim is to make the insolvency process less draconian for small businesses and, in the long term, encourage a more entrepreneurial culture. The changes foreshadow streamlined and genuine debt forgiveness outside of voluntary administration.
What should a Pre-Insolvency Adviser (a lawyer, accountant or other professional) do to help a financially troubled small or medium-sized business?
Pre-insolvency advisers are professionals who help business owners to conduct a root cause analysis to understand why their business is failing and then help them to develop a turnaround strategy (i.e. what to do next) or if this is not possible, plan an orderly winding up.
Voluntary administration is a process where a registered insolvency professional temporarily takes control of a business which is insolvent, or in financial difficulty. This professional, the ‘voluntary administrator’, takes away control from the directors, for a period of time, in order to assess the finances and determine the future of the business.
Voluntary administration rarely results in a good outcome for the business – or its creditors. The end result is usually the winding up of the business as a going concern, and ‘next-to-nada’ for the creditors.
What is the role of solicitors in the restructuring of insolvent small or medium-sized businesses today?
In article: The COVID-19 economic meltdown has already led to some quick changes to Australian bankruptcy and insolvency law. However, as the basic tools for dealing with insolvency remain the same, it is worth looking at the general regulatory landscape…
Is your business insolvent because of COVID-19? What to do next (for small and medium-sized business)
Business owners need to be realistic about the collectability of invoices and be ruthless with cutting expenses to deal with a potential economic depression. They also need to look to the future and pivot their business strategy because the world has changed.
The new Coronavirus Economic Response Package Omnibus Act 2020 (the Coronavirus Economic Response Act) has just come into force. This Act contains a range of new measures to support businesses through the Coronavirus/COVID-19 pandemic and its consequences.