Frequently Asked Questions
What is simplified debt restructuring?
Simplified debt restructuring (“SDR”) is a process for insolvent small companies to restructure their businesses at a reduced cost to traditional insolvency appointments. SDR enables financially distressed but viable companies to restructure their existing debts so that they can continue to trade. Creditors are unable to enforce debts against a company subject to SDR. There are a range of benefits for a company in doing this.
What is the process?
The SDR process can be broken up into 3 stages; pre-appointment, restructuring and plan (discussed in the following question).
In the pre-appointment stage, we will assess your company’s eligibility for the process and assist the directors to make the appointment.
The restructuring stage can be broken up into 2 distinct phases, the proposal period and the acceptance period. During the proposal period, we will work with you to develop a restructuring plan. We will assess the restructuring plan and make a viability declaration. The proposal period runs for around 4 weeks but can be extended by us for up to 2 weeks in reasonable circumstances.
The acceptance period generally runs for around 3 weeks. During this time your company’s creditors can dispute the value of their claims and choose to accept or reject the restructuring plan.
What happens if my company’s restructuring plan is accepted by creditors?
If the restructuring plan is accepted by creditors, the company will enter the plan stage. Creditors will continue to be restricted in what they can do to recover the pre-plan debts from the company. The company will then be obligated to act in accordance with the restructuring plan by making payments to us in accordance with the plan. We will hold the funds on trust for the benefit of the company’s creditors, to be paid out in accordance with the plan. The plan can run for a maximum of 3 years.
When do my company’s creditors first find out about the SDR process?
We are obligated to notify your company’s creditors on our appointment.
Who is responsible for the trading of my company’s business during the SDR process?
Generally, the company’s directors will remain in control of the company during SDR. They are responsible for the trading in the ordinary course of business.
What is meant by “in the ordinary course”?
To trade in the ordinary course is to trade in line with normal, day-to-day operations. Things like purchasing stock, selling to customers, hiring staff and continuing construction are generally thought to be in the ordinary course.
What debts are included in a small business restructuring plan?
All unsecured debts, excluding employee entitlements, are included in a small business restructuring plan.
What happens to employee entitlements?
All payable employee entitlements must be paid prior to the plan being sent to creditors for consideration (by the end of the proposal period).
What about my company’s secured creditors, like the bank?
Your company’s secured creditors are not subject to the restrictions placed on unsecured creditors during SDR. Generally, they will be free to enforce their debts as usual. This is where our negotiating skills can be particularly helpful.
Who can assist with SDR?
Only a registered liquidator is allowed to be appointed as a restructuring practitioner.
Why chose SBRA?
Our management team has over 60 years of experience assisting businesses to navigate liquidity issues.
How much does SDR cost?
The cost of the SDR process varies depending on your company’s circumstances. For example, the number and value of creditors your company has can have a large impact on the cost.
We charge a single upfront fee to take you through the pre-appointment and restructuring stages. By law, we are entitled to be paid remuneration calculated as a percentage of payments made to your creditors during the plan stage.
For an estimate, please contact us.
Am I Eligible for SDR?
Please complete the following questionnaire to allow our professional team to assess your eligibility. In the event you are not eligible for the SDR, there are other options which we can discuss with you.