Who prepares the restructuring plan?
The directors of the company prepare the restructuring plan in the approved form with the assistance of the restructuring practitioner.
What is in the restructuring plan?
The restructuring plan must:
- identify the company property to be dealt with
- specify how that property is to be dealt with
- provide for the remuneration of the restructuring practitioner for the plan
- specify the date on which the restructuring plan was executed.
The restructuring plan may also:
- authorise the restructuring practitioner for the plan to deal with the identified property in a way specified in the plan
- provide for any matter relating to the company’s affairs
- be expressed to be conditional on the occurrence of a specified event within a specified period. The specified period cannot be longer than 10 business days after the day the proposal to make the restructuring plan is accepted.
The restructuring plan must not:
- provide for the transfer of property (other than money) to a creditor
- provide for the company to make payments under the plan in respect of an admissible claim, after three years beginning on the day the plan is accepted.
Are creditors treated equally under a restructuring plan?
All admissible debts and claims rank equally under a restructuring plan. No creditor, or class of creditor, receives priority in repayment of their debts or claims.
Prerequisites to the making of a plan
Before a restructuring plan proposal is sent by the restructuring practitioner to creditors, the company must have (or have substantially complied with the requirement to have):
- paid the entitlements of employees that are due and payable, and
- given returns, notices, statements, applications or other documents as required by taxation laws (within the meaning of the Income Tax Assessment Act).
Unless the two criteria above have been satisfied the company cannot propose a restructuring plan.
This excludes employee entitlements that are not currently due to be paid. Further, tax debts do not need to be paid – only the required returns, etc., given.
How is a restructuring plan proposed?
A company under restructuring proposes a restructuring plan if:
- the company prepares a restructuring plan and restructuring proposal statement that complies with the requirements of the law
- the company executes the restructuring plan during the proposal period (generally, this is the period of 20 business days beginning on the day the restructuring begins)
- the restructuring practitioner prepares and signs a declaration
- the restructuring practitioner gives a copy of the restructuring plan, restructuring plan standard terms, restructuring proposal statement and the restructuring practitioner’s declaration to creditors as soon as practicable after the company executes the restructuring plan
- immediately before the restructuring practitioner gives copies of these documents to creditors, the company has or has substantially complied with the following obligations:
- paid the entitlements of employees that are due and payable
- given returns, notices, statements, applications or other documents as required by the taxation laws (within the meaning of the Income Tax Assessment Act).
The restructuring plan is proposed on the date the restructuring practitioner gives the required documents to creditors.
Deciding whether to accept a plan
A decision about whether a restructuring plan should be accepted is made by affected creditors who are given the following documents by a restructuring practitioner:
- the company’s restructuring plan
- restructuring plan standard terms
- the company’s restructuring proposal statement
- a declaration from the restructuring practitioner about whether the eligibility criteria for restructuring are met, whether the company is likely to be able to discharge the plan obligations, and statements about the practitioner’s belief about the completeness of information set out in the company’s restructuring proposal statement
These documents must be accompanied by a request from the restructuring practitioner to an affected creditor to:
- give a written statement to the restructuring practitioner about whether or not the restructuring plan should be accepted
- if the affected creditor agrees with the assessment of the creditor’s admissible debts or claims – verify the creditor’s admissible debts or claims as set out in the restructuring proposal statement
- if the affected creditor does not agree with the assessment of the creditor’s admissible debts or claims set out in the restructuring proposal statement – notify the restructuring practitioner under reg 5.3B.22 of the Corporations Regulations 2001.
The practitioner must tell affected creditors who to return their statements (above) to, and that the statements need to be returned, usually before the end of 15 business days beginning on the day the restructuring practitioner gives the documents at 1–4 above (acceptance period). The acceptance period of 15 business days may be longer in circumstances where affected creditors disagree with the schedule of debts and claims in the restructuring proposal statement.
A plan is accepted if, at the end of 15 business days (or any longer acceptance period), the majority in value of affected creditors who returned statements to the restructuring practitioner stated that the plan should be accepted. Regulation 5.3B.25 of the Corporations Regulations provides for calculation of the value of an affected creditor.
The restructuring plan is then taken to have been made on the day after the end of the acceptance period or on the day that a specified event (according to the plan) has occurred.
Who is the restructuring practitioner of the plan?
The restructuring practitioner(s) of the company will be the restructuring practitioner(s) of the restructuring plan unless the company, by resolution of the board, appoints another registered liquidator(s) to be the restructuring practitioner(s) for the plan.
What notice of the restructuring plan must be provided in public documents?
Once the creditors accept the restructuring plan, there is no statutory requirement to add additional words after the company name in any document.
On acceptance of the restructuring plan and appointment of a restructuring plan practitioner, the Company Register status will change from EXAD (External Administration) to REGD (Registered). This information will be available to the public on ASIC Connect or through free searches of the Company Register.
