In brief
Creditors commonly find that their applications to wind up a company are suddenly deferred at the last minute by the appointment of a voluntary administrator. Now, in the early days of the small business restructuring (Part 5.3B) process, the courts are already grappling with those circumstances in the context of that new regime. At the time of writing, only four restructuring appointments under Part 5.3B have been notified to ASIC. Two of them have been the subject of court proceedings.
The resulting decisions reveal:
- the approach to assessing satisfaction of the liability limit in the eligibility criteria may be that of performing a “just estimate”;
- the difficulty in challenging a restructuring process on any application to adjourn a winding up application;
- a more favourable proposed restructuring plan than the anticipated outcome of a liquidation is likely sufficient to support an adjournment of winding up proceeding until after the voting process on a restructuring plan concludes.
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