The chimera of restructuring reform: An opportunity missed for MSMEs in pt 5.3B

Abstract

In 1993, corporate rescue was modernised with the introduction of pt 5.3A of the 'Corporations Act 2001' (Cth). It is true to say that the new debt restructuring procedure was ‘embraced’ by those who could access it - companies and their directors, those who would administer it - registered liquidators and those whose debts would be attended to and perhaps paid in part - creditors. In the first 4 months of Part 5.3A, there were 142 appointments. On 1 January 2021 Part 5.3B commenced, which introduced a new small business restructuring process that includes the appointment of a small business restructuring practitioner to companies with liabilities of less than $1 million and acceptance of a restructuring plan by creditors. There have been five appointments in the first 4 months of the new Part 5.3B small business restructuring. There is concern even at this early stage that this new regime is not going to work efficiently or effectively and is not going to be embraced by companies and their directors, registered liquidators and creditors, unlike what we experienced in 1993.