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Debt Restructuring Part 3 – Restructuring plans

This is the third part in a blog series discussing the new debt restructuring regime, which commences on 1 January 2021. This blog discusses the the process of putting forward a restructuring plan to creditors.

The regime will be implemented through substantial amendments to the Corporations Act 2001 (Cth) (“the Act”) and the Corporations Regulations 2001 (Cth) (“the Regulations“). Relevant links are:

How a restructuring plan is to be proposed is guided by the Regulations (Division 3, Subdivision B). The process is again somewhat similar to a voluntary administration, but instead it avoids the need to call creditors meetings. A regime for the restructuring practitioner to resolve disputes about creditors’ debts is tied into the process. A brief overview of the process follows.

  1. The company has 20 business days (the ‘proposal period’) to prepare and execute a restructuring plan with an accompanying restructuring proposal statement.
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Winding Up Applications and the Extension of Time

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

Section 459R(1) of the Corporations Act 2001 (Cth) (“the Act”) requires that an application be filed to wind up a company, and for it to be determined within six months of filing. Should that six month period expire, the application can be dismissed without the orders sought being made.

However, there is provision for the six month period to be extended under section 459R(2) of the Act, if the applicant can satisfy the Court that special circumstances exist.

These time limits compare unfavourably with the Bankruptcy Act 1966 (Cth), which allows 12 months for an application for a sequestration order to be determined and the ability to extend the application for up to a further 12 months.

In the New South Wales Supreme Court, His Honour Justice Hamilton has said in relation to an application to extend time under section 459R of the Act:
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