Navigating the insolvency maze
You want the best for your clients in financial distress. However, with the newly-legislated Small Business Restructuring Process and the Simplified Liquidation Process for financially challenged SMEs with debts under $1 million, some may overlook other insolvency solutions that could achieve a better outcome.
The insolvency reforms that came into effect on January 1, 2021, may appeal to many small business owners heading towards insolvency as they:
- facilitate a faster debt restructuring process by giving company appointed registered liquidators just 20 days to develop a plan and creditors 15 days to vote on it.
- expedite the liquidation process by removing the Liquidator’s obligation to create a report and present it to creditors and replacing time-consuming creditors’ meetings with electronically distributed information and voting
Although the reforms offer faster, simpler processes, like any legislation they come with a multitude of regulations and eligibility criteria, which in turn increase the responsibilities of directors.
A Registered Liquidator from Jirsch Sutherland can help you and your clients navigate the maze – and assess your client’s businesses to determine whether the new insolvency processes are the best option, or whether another insolvency solution would achieve a better outcome. We can help them understand which process is right and when it should be used.
Whichever insolvency solution fits best, we will ensure your clients benefit fully from the process and stay compliant, setting them up for a strong recovery or a best-outcome wind-up.
As the predicted wave of insolvencies has started to occur, albeit with a ripple at first, with the end of JobKeeper on March 28, now is the time to act to help your distressed clients. As always, early intervention is critical. There’s nothing “simple” about the circumstances or options for businesses in financial distress.
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