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The simplified debt restructuring process was largely successful although the number of companies involved was small.
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ASIC reports on small business restructuring scheme
19 January 2023
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ASIC has outlined its findings on all the small business restructuring practitioner appointments for the 18-month period to 30 June 2022 in the first assessment of the scheme.
Its report (REP 756) also covers the small business restructuring (SBR) outcomes to 30 September 2022.
The SBR scheme was introduced on 1 January 2021 to create a simplified debt restructuring process for eligible small businesses and a new type of registered liquidator.
It was the first type of formal insolvency appointment which left the control of the insolvent company in the hands of the directors rather than the appointed registered liquidator.
Key observations from the report include:
- There were 82 restructuring practitioner appointments during the review period.
- From those appointments, 72 transitioned to restructuring plans from the 78 proposed.
- The balance of 10 appointments were either terminated on the basis the company was ineligible, creditors rejected the proposed plan or the directors ended the restructuring appointment.
ASIC said all the registered liquidators appointed as restructuring practitioners during the review period were those registered to practise as external administrators of companies (including as restructuring practitioners), receivers and receivers and managers.
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To date, one person had been registered as a registered liquidator to practise only as a restructuring practitioner for a company or for a restructuring plan.
Based on information reviewed to 30 September 2022, ASIC identified:
- Creditors approved the majority (72) of the 78 sent to affected creditors (92 per cent).
- Where a restructuring plan was accepted, 47 plans were effectuated (65 per cent), one plan was terminated and 24 plans were ongoing as at 30 September 2022 (33 per cent).
- The majority of companies where a restructuring plan was effectuated or was ongoing appeared to be continuing to operate their business (66 per cent).
- The ATO was a creditor in 89 per cent of companies which entered a restructuring plan and was a major creditor in 79 per cent of those companies.
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