This week saw the first appointment of a Restructuring Practitioner for a Company under the new Small Business Insolvency Law Reform regime. The new laws around Restructuring Processes and Simplified Creditors Voluntary Liquidation engagements came into force on 1 January 2021 after a whirlwind, drafting and consultation period. It was assumed that following the revocation of many of the COVID-19 Insolvency relief measures there would be a Tsunami of insolvency appointments (both restructuring and otherwise) in early January. Perhaps not surprisingly, there were in fact more lodgements of companies declaring their Eligibility Status during January (in order to temporarily extend the Insolvency Relief Measures), than there were actually taking up the Small Business Restructuring Regime. Now that we are into February, with Jobkeeper (at this stage) finishing up at the end of March, it is likely that there will be more financially distressed businesses assessing their options to move forward. It is important that advisors, not only to these financially distressed businesses but also others that might be affected (eg. creditors, landlords, employees, suppliers) are aware of the changes to the insolvency laws, the options available and the impacts on stakeholders.
For any advice in terms of options available to financially distressed small business, or other stakeholders, please contact us on 1800 SMB ADVISORY or at socials@smbadvisory.com.au.