On January 1st 2021, new laws came into effect to support struggling small businesses and enhance their survival rate following the wind down of COVID-19 government stimulus packages.
The changes are aimed at reducing the time, cost and complexity involved for those small business suffering from financial distress.
Businesses now can now restructure more easily, or in the instances where the business can’t be saved, streamline the liquidation process.
With many industries hit hard by COVID-19 and conditions unlikely to return to pre-pandemic levels soon, business owners must act swiftly and decisively.
The trusted Offermans team can support you to navigate the new world order and will work alongside you to help your business to recover from the challenges and preserve its value.
One of the key aspets of the reform is that the Director of a debtor company can remain in place during the relevant moratorium period, meaning they no longer have to hand over control of their business to an external insolvency practitioner.
That allows Director’s to retain their say over the direction of their business, supported by industry professionals with the expertise and experience to take on the role of Small Business Restructuring Practitioner.
Key areas of reform include:
Debt restructuring for businesses facing financial distress
Small business Directors appoint a Small Business Restructuring Practitioner to assist with the restructure of the company’s debt;
Directors will remain in control for a period of 20 days to prepare a Debt Restructuring Plan (if the business is deemed eligible). The Plan must be certified by the Small Business Restructuring Practitioner.
The Plan will then be made available to creditors, who will have 15 days to vote on whether the plan is approved or not approved*.
*The business must pay all employee entitlements and taxes which are due and payable before a plan can be put to creditors.
Small business simplified liquidation
The liquidation process for small business has been streamlined to reduce the time, cost and complexity involved for those small businesses suffering from financial distress, to allow assets to be quickly re-allocated.
This applies only where the Director chooses to enter into voluntary liquidation, aiming to make the process faster and cheaper – ultimately allowing more funds to be returned to creditors and employees.
Investigative requirements, meetings and reporting functions have all been reduced, along with increasing technology neutrality to allow for more convenient communications.
A registered liquidator must be appointed. They will then confirm if the business is eligible for this streamlined process.
Focus on enhanced technology
The reform includes new measures to increase the use of technology for registration requirements and the creation of an online portal for creditors to access information.
This will allow the external administration process can be carried out more efficiently.
How can Offermans help?
In a few steps, our team can help to make sense of your situation, formulate a plan that’s right for you and support you to achieve a solution that sets you free.
Experience: At Offermans, our team calls upon more than five decades of experience in assisting underperforming businesses with exit or recovery strategies, to now position itself as regional Queensland’s leading business improvement firm.
Expertise: Our team sees a future where peace-of-mind, less stress, greater confidence and improved culture result in stronger earnings, smoother operations and more resilient businesses.
Ethics: We provide professional, judgement-free services to guide you or your business through any financial situation.
The First Step
Take control of your financial future.
Contact us now for an obligation-free, confidential consultaiton.