Debt Restructuring

By restructuring debt, businesses can improve cash flow, reduce financial pressures, and create a pathway to recovery.

The Role of the Director's Advocate in Debt Restructuring

Navigating the complexities of debt restructuring can be daunting, which is where a Director’s Advocate plays a crucial role.

Debt Restructuring can be done using both formal and informal means, however can have unintended consequences for the business and the director's personally.

Acting as a trusted advisor, the Director’s Advocate works closely with company directors to guide them through the process, ensuring informed decision-making and compliance with legal obligations. This approach reflects our core principle of director advocacy in debt restructuring.

When appointed, a Director's Advocate will work to:

Control the Process

We arm the director's with an understanding of the process, help them assess restructuring options, including corporate debt restructuring and choose the best path forward for them and the business.

Solve the Underlying Problems

We implement measures to solve, or at least mitigate, underlying issues and foster good decision making. We also Identify areas where there may be personal risk for the directors or unintended consequences for the business, and where possible, mitigate these risks.

Advocate for the Business Owner

We act as the intermediary between the business and practitioner or creditors to secure favourable terms and maintain positive relationships. If actions are taken against the directors, we advocate for their interests, offering expert director advocacy in debt restructuring situations.

Our Debt Restructuring Services

By partnering with a Director’s Advocate, businesses gain a knowledgeable ally dedicated to achieving the best possible outcomes, minimizing disruptions, and positioning the company for long-term success.

We can assist you with the following Debt Restructuring services. As your Director's Advocate, everything we do is done in the director's best interests.

01 Small Business Restructures ("SBR")

The SBR process provides a formal pathway for businesses with unsecured liabilities of less than $1 million to formally negotiate with their creditors, including ATO debts. They do this by making an offer to the creditors that is a better return to them than through any other mechanism (i.e. liquidation).

While Small Business Restructures are formal insolvency events, the control of the business stays with the directors through the process.

Benefits of an SBR over other restructuring formats:

Offer to settle for as little as 20 cents in the dollar.
Pay out debts over terms of up to 3 years, interest free.
Appointing a practitioner to an SBR may avoid director's becoming personally liable for debt.

When to consider:

The business meets the eligibility criteria for an SBR.
Unsecured debts of at least $75,000 (this is where the economics of the process starts to make sense).
There is a reasonable prospect that the business will be successful if debts can be negotiated.

While the outcome of an SBR is ultimately up to the creditors, SBR's are a great tool as they mitigate most of the personal insolvency risks for the director.

We've compiled a comprehensive guide to Small Business Restructures here >

02 Pre-pack Restructuring

Unlike an SBR, there can be personal risks and consequences for director's of a business that undertake a Pre-pack Restructure, such as claims for insolvent trading or claims to collect on Loan accounts.

The pre-pack insolvency arrangement provides a chance to rescue a business without incurring the expenses and disruptions associated with voluntary administration. This option may be viable when the business is not eligible for an SBR.

There is a lot of risk associated with Pre-pack Restructuring and the process requires a significant amount of pre-planning to ensure there is no breach of director's duties.

There are also a number of firms that conduct Pre-pack Restructures in a manner that may place the director at risk of action by the Australian Securities and Investments Corporation or other agencies, so it's best to ensure you use a reputable firm, like Thryvv.io, to assist and effectively identify and manage the risks.

When to consider:

The business does not meet the eligibility criteria for an SBR.
There is a reasonable prospect that the business will be successful if debts can be resolved.
There is sufficient time to run the process before a creditor commences winding up proceedings.

03 Practitioner Facilitated Restructuring

Unlike an SBR, there can be personal risks and consequences for director's of a business that undertake practitioner facilitated restructuring, such as claims for insolvent trading or claims to collect on director loan accounts.

There are a range of practitioner facilitated Restructuring options, which generally involve appointing an Company Administrator or Liquidator to operate the business. The directors can then propose to continue operating the business under a Deed of Company Arrangement, licence agreement, business sale or other arrangement.

This option is the most risky of the formal restructuring options as the decision making is taken out of the director's control and put into the Administrator's hands. Depending on the type and structure of the debt, practitioner facilitated restructuring can also have unintended consequences, so proper prior to appointing the Administrator is essential.

When to consider:

The business does not meet the eligibility criteria for an SBR.
There is a reasonable prospect that the business will be successful if debts can be resolved.
There are issues that make informal options and a Pre-pack Restructure unviable (for example, a time constraint).

Feature Spotlight: How Trade-on Voluntary Administrations Work >

04 Debt Refinancing

Debt refinancing involves replacing existing debt with new debt under more favourable terms. This option can lower interest rates, extend repayment periods, or consolidate multiple debts into a single payment, making it easier to manage financial obligations.

When to Consider:

Interest rates on existing loans are high.
Cash flow issues are making it difficult to meet current repayment terms.

Consolidation would simplify multiple debt obligations.

05 Payment Plan Negotiation

Negotiating new payment terms with creditors can provide temporary or permanent relief. This might include reducing monthly payments, deferring payments, or extending the loan term.

When to Consider:

Temporary cash flow issues are affecting the ability to meet current payment terms.

Creditors are willing to collaborate on alternative arrangements.

06 Informal Negotiation

Informal agreement between the business and its creditors to restructure debt without entering formal insolvency proceedings. This option can be less costly than formal processes and often includes elements of business debt consolidation or an informal debt agreement.

When to Consider:

There is a cooperative relationship with creditors.
The business can resolve its financial issues without legal or insolvency intervention for example, through informal corporate debt restructuring.

Book your FREE strategy call

With more than 15 years’ experience in both financial consultative roles and in corporate level leadership, we can identify options to help your business achieve financial independence with our business recovery services.

Your Options in Financial Distress

We've put together a free interactive guide to help you understand your options.

At Thryvv.io, we act for you.

Debt restructuring can be challenging and legally complex for directors, who may face significant personal liability from the process.

For debt restructuring engagements, our focus is to ensure advice for directors where their interests are prioritised.

For engagements where an Insolvency Practitioner is required, we will select one that we believe will yield the best outcome for the Company and its directors in the circumstances.

We work closely with a large number of Practitioners, and as such get access to discounted costs. This often means that we can offer director centric services for the same or very similar costs as going directly to them.

Calling a Director's Advocate before you call the Insolvency Practitioner can save directors significant money, time and heart-ache.

Book a FREE Strategy Call >