Australia's new insolvency regimes for small businesses, which came into effect on 1 January 2021, offer two options for struggling companies: the Restructuring Process (RP) and the Simplified Liquidation Process (SLP). The RP is designed for companies with a chance of survival and involves a court-supervised restructuring plan, while the SLP is a quicker and cheaper option for companies with no chance of survival. Both options have eligibility criteria, with the RP requiring a company to have a viable business model and the SLP requiring a company to have no viable business model. The RP involves the development of a restructuring plan, voting on the plan by creditors, and making the plan, while the SLP involves a simpler liquidation process. The new regimes aim to provide greater flexibility and support for small businesses facing financial difficulties.
