How A Business Restructure Can Keep Your Business Afloat

Dec 7, 2021 | Uncategorised

There are likely to be hundreds of Australian businesses struggling to stay afloat as we attempt to transition to the ‘new normal’ phase of the global pandemic crisis. After lengthy, repeated lockdowns with little, or no, trading and a struggle to find employees, many companies will fold.

If your business is suffering from financial difficulties you should consider corporate restructuring to save your company. This will enable the company directors to keep control of the company and keep the business operating while they work with a licenced restructuring practitioner to develop a restructuring plan.

This article provides an outline of the process and will advise how to get more information and top-quality professional assistance.

Is my business eligible?

Directors of the company should consider whether they think the business can continue. If they believe they can continue to trade and return to profitability then a restructure may be the solution to your current financial problems.

To be eligible for the formal restructuring process

  • the liabilities of the business may not be greater than $1 million
  • Employees must have been paid in full
  • The company must not have been through the same process or been the subject of liquidation in the last seven years
  • The directors are subject to the same rules, including any other companies they have directed in the last seven years.

What is the role of the restructuring practitioner?

A restructuring practitioner must be recognised by The Australian Securities and Investments Commission (ASIC) as a “registered liquidator”.

The restructuring practitioner will

  • Assess the company finances and provide financial advice
  • Help the directors to prepare a restructuring plan
  • Assure creditors
    • the company is eligible for the restructuring process
    • The company is likely to be able to meet the obligations identified in the plan
    • The restructuring statement is as expected
  • Highlight any matters on which he is unable to provide assurance
  • Perform other duties as required

What do directors do during the restructuring process?

The directors retain control of the company and may keep trading as normal. They may not pay any debt that is to be included in the restructuring plan and they mustn’t sell all or part of the business.

What is the impact on my creditors?

Creditors can’t start, or follow up on, any claims against the company without the agreement of the restructuring practitioner.

Creditors will decide whether to accept the restructuring plan based on the recommendation of the restructuring practitioner. If accepted, it is expected this will provide better value for the creditor than if the company went into liquidation.

How does the plan formally end?

The restructuring plan for a company formally ends when all obligations listed in the plan have been met and debts have been settled as agreed.

Where can I get more information?

The Australian Securities and Investments Commission (ASIC) have a summary of the restructuring process on their website.

Note they recommend seeking professional advice.

Corporate Lifeline for professional help and advice

At Corporate Lifeline, we have registered liquidators and could be the restructuring practitioner to help your company directors draw up a restructuring plan.

We have saved hundreds of Australian companies that were struggling with debts and financial difficulties and we may be able to help resolve your financial difficulties without entering the formal restructuring process.

A lifeline for your company

Corporate Lifeline will assess the finances of your company. We are able to guide and assist company directors with strategies that may be used to help resolve financial difficulties so your company may continue and trade profitably again.

Your business will undergo a review of finances and potential causes for current difficulties. We will attempt to identify opportunities to increase revenue. We will look at how to reduce expenses and costs. We may be able to renegotiate your current finance arrangements.

We will suggest strategies to recover outstanding debts. We may recommend selling assets that don’t have a major impact on the continued successful operation of your company.

An assessment of company business processes may identify employees whose roles are not key to the business and could be replaced or terminated.

We might be able to discuss payment arrangements with your creditors so debts are paid over a longer period of time.

Our restructuring professionals deliver results to protect, create and maximize value throughout all stages of the process. We work with your company’s management and creditors to produce the best outcome for all.

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