This is the seventh article in a series of articles aimed at informing directors of their duties, and the options available for small to medium enterprises (SME) if faced with insolvency or financial distress.

As a result of the COVID-19 pandemic and associated economic downturn, the Australian Government made changes to the insolvency framework with the aim of helping more small businesses restructure and survive that difficult period. The Small Business Restructuring (SBR) process is one of two new formal insolvency appointments introduced by the Federal Government in 2021. With the help of a registered liquidator (called a small business restructuring practitioner – SBRP), a company can put forward a plan to its creditors to restructure its existing debts, while allowing the directors to remain in control of the business, property, and affairs of the company during the restructuring period.

This is the third in a series of articles aimed at informing directors of their duties and options for small to medium enterprises if faced with insolvency.

This article touches on the commercial risks faced by the business itself, which will drive the turnaround plan. If a business is struggling and potentially insolvent, that is unable to pay its debts when they fall due, there are several risks that directors need to be prepared for.