The Federal Government has announced a suite of changes to Insolvency Law targeted at helping small business recover form the COVID-19 Lockdowns. Here’s the summary:
- A new Simplified Restructuring process that draws on key features of the US Chapter 11 bankruptcy process allowing small businesses to restructure their debts while remaining in control of their business. An insolvent small business would have 20 days to come up with a restructuring plan, and creditors would have to vote on whether to accept it within 15 days after that. It will be much much cheaper than the current Voluntary Administration process.
- • A new Simplified Liquidation for small businesses. It will be quicker, easier and cheaper. There will be less investigation, fewer recovery actions, no mandatory meetings and fewer reporting requirements.
- Temporary protections for small businesses who announce they want to restructure but can’t get immediate access to an insolvency practitioner in the expected rush in January 2021
The specific laws will come in the next few weeks.
This document contains general advice only and is prepared without taking into account your particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should speak to a licensed financial advisor who should assess its relevance to your individual circumstances. While The Field Group believes the information is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the corporations Act 2001.