Transcript

Hi, my name is Brendan Giles from Worrells. Today, I'm providing you with an introduction to the small business restructuring process, which is a simplified pathway for small businesses facing financial difficulty.

To deal with their debts and return to viability now, small business restructuring is a formal process set out in the Corporations Act where you appoint an external restructuring practitioner to come in and assist your business to restructure and that restructuring process is in three parts.

So, you start by pulling a restructuring practitioner and entering what's called the restructuring process. It's a 20-business-day process that can be extended to 30 business days if required, where the restructuring practitioner and the company directors work together to put together a restructuring plan and that is an offer to creditors to settle or negotiate or compromise the company's debts.

Then work with a restructuring practitioner to prepare a report. That report explains to creditors what the plan is, what the company's financial situation is, and how it got in that situation. It then recommends that they accept the plan and provides some context around whether the company will be able to comply with that plan.

We then move into what's called the decision period, during which creditors have 15 business days to vote on whether they accept the plan or not. You need a majority of creditors in value to accept a plan.

If the plan is accepted at the end of those 15 business days, you execute the restructuring plan. The restructuring plan is made, and then the business continues trading under it until the plan is completed. That plan could extend for up to three years, but most of them are a sort of 6-to-12-month period.