Small Business Restructure in Transport Industry: 17c/$.
We completed a successful Small Business Restructure of a transport business primarily involved in providing transport services as a subcontractor. The director of this business attributed the financial issues to escalating fuel costs and an inability to reduce fixed costs as market conditions deteriorated (both factors largely arising out of COVID-19).
The Facts
The unsecured creditors at the commencement of the SBR were approximately $640,000, with the most significant creditor being the ATO at around $420,000.
The business held cash at bank, vehicles and debtors at the date of the appointment, none of which were available under the restructuring plan.
The business continued to trade during the restructuring period, and investigations identified potential unreasonable Director Related Transactions and an Insolvent Trading claim.
Restructure Plan
The proposal provided for approximately $75,000 to be available to unsecured creditors after related party creditors elected not to participate in any dividend.
This proposal provided a better outcome for creditors than in a hypothetical Liquidation and creditors duly voted to accept the restructuring proposal.
Outcome
Following the process, 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.
