Australia has well-established and flexible restructuring and insolvency procedures (formal and also informal). A number of options are available.

• Informal workout
• Safe harbour
• Voluntary administration followed by a deed of company arrangement or liquidation
• Small business restructuring plan
• Creditors’ voluntary liquidation
• Court liquidation
• Creditors’ scheme of arrangement
• Receivership

When considering restructuring options for micro, small and large businesses it is prudent to engage early with restructuring advisors like us. A good understanding of the various restructuring options will enable a company to take prompt action to implement a strategy that can result in the most desired and optimal outcomes, whether that is a complete internal restructuring, informal workout of existing debt obligations, winding down of certain business units or implementing formal insolvency processes.

We assist clients in analysing the situation and in preparing an effective restructuring strategy – formal or informal. The above options are explained in more detail in our in-depth booklet. Call David Levi 0418 602 466.

Glossary

Informal workout (reorganisation)

Suitable whenever informal solutions with creditors are feasible and/or directors have capacity to provide fresh debt or equity funding.

Safe harbour

Suitable as a support tool for enabling directors of a distressed Company to continue to trade while working on an informal workout or planning for an informal insolvency.

Voluntary administration followed by a deed of company arrangement (‘DOCA’) or liquidation

A DOCA is suitable as a flexible formal insolvency restructuring tool. A DOCA follows a voluntary administration. Widely suitable for restructuring debts.

Small business restructuring plan (‘SBR’)

For micro and small businesses (less than $1 million in total debts) – a quick and straightforward alternative to a DOCA to restructure. SBR allows directors to remain in control through restructure. Automatic moratorium.

Creditors’ voluntary liquidation

Best suited to a terminal liquidation of a failed or insolvent company or where an attempt at restructuring through voluntary administration and DOCA would be unlikely to work.

Court liquidation

Effective in instances of shareholder or management failure or director or shareholder dispute. Also commonly used by creditors to attempt to force an involuntary liquidation on a debtor company that has failed to pay its debts.

Creditors’ voluntary scheme of arrangement

Another flexible formal insolvency restructuring tool – more cumbersome to implement than a DOCA but with the advantage of being able to bind secured creditors. Ideally suited to financial restructuring of large or complex debt.

Receivership

Often an attractive option for secured creditors because (subject to various statutory obligations) a receiver is generally answerable to their appointor only. A receiver and manager will also have broad powers to manage the business whilst appointed, and will generally seek to sell the company’s business as a going concern.

David Levi is founder of Levi Consulting. David Levi is a highly experienced subject matter expert on restructuring. He is qualified to act as a restructuring practitioner for formal and also informal procedures. Levi has extensive experience in a range of restructuring, insolvency, special situations and distressed transactions.