HomeCase studySmall Business Restructure in Construction Industry: 19c/$

Small Business Restructure in Construction Industry: 19c/$.


construction business in financial distress

Our client operated in the production and installation of steel frames in Victoria. A director of the business attributed the failure of the Company to the global steel shortage, the increase in costs of materials and the level of fixed costs, during a period of reduction in revenue (both factors largely arising out of COVID-19).

The Facts

The unsecured creditors at the commencement of the Small Business Restructure (SBR) were approximately $380,000 in value, with the most significant creditor being the ATO for around $325,000 of that debt.

The Company held cash at bank, vehicles, debtors and retentions at the date of the appointment, none of which were available under the restructuring plan.

The Company continued to trade during the restructuring period, and investigations identified potential unreasonable Director Related Transactions, an unfair preference claim and an Insolvent Trading claim.

Restructure Plan

The proposal provided for approximately $75,000 to be available to unsecured creditors, being a return of approximately 19c/$, after related party creditors elected not to participate in any dividend.

This proposal provided a better outcome for unsecured creditors than in a hypothetical Liquidation, noting that in that process there would be a significant amount of priority (employees) creditors crystalised upon the Company being placed into Liquidation.

Creditors duly voted to accept the restructuring proposal.


Following the acceptance of the proposal the director was able to carry on the business without the significant debt levels and without the cost or burden of the Company being placed into Voluntary Administration, to reach the same outcome.

Throughout the process, Rodgers Reidy liaised heavily with the major creditors and the Company’s current advisors to ensure that any proposal put forward would reach the minimum requirements accepted and to fully advise on the impact COVID-19 had on the business.

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