12 April 2021
On 1 January 2021, the Federal Government's post-COVID small business restructuring reform package came into effect. This package introduced into the Corporations Act 2001 (Cth) (Corporations Act):
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two new insolvency regimes for companies with liabilities of less than AUD 1 million, namely:
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a "debtor in possession" restructuring and restructuring plan process (Restructuring)
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a simplified liquidation process (Simplified Liquidation)
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temporary insolvency relief for companies (and their officers) that wish to enter restructuring but cannot find a registered liquidator able to act as the Restructuring Practitioner (RP) for the restructuring during the period 1 January 2021 to 31 March 2021, including:
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a temporary insolvent trading safe harbour for directors in respect of debts incurred in the ordinary course of business
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a temporary increase to statutory demand thresholds of AUD 20,000 and 6 months (otherwise AUD 2,000 and 21 days, respectively)
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In this publication:
Part A: Restructuring
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Eligibility criteria
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How does restructuring commence?
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Initial notices to creditors and the Australian Securities & Investments Commission (ASIC)
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Development of the restructuring plan
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Prerequisites for putting the restructuring plan to creditors
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Putting the restructuring plan to creditors
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Voting on restructuring plan and disputing company's assessment of admissible debts and claims
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Making the restructuring plan
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Ending the restructuring and consequences
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Effect on key stakeholders
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RP – Remuneration and liability
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Transitional protections for eligible companies that cannot find an RP in early 2021
Part B: Simplified Liquidation Process
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Eligibility
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What will be different from a normal CVL?
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Safeguards to prevent misuse
For further information, please contact:
Maria O'Brien, Partner, Baker & McKenzie
maria.obrien@bakermckenzie.com