Is it legal? Is it an option for me?

What is a Business Restructure?

In a business restructure, all assets and goodwill are valued and sold to a new entity for a fair commercial price. Payment is made to the old entity and the sale proceeds are distributed according to a priority and security positions. If applicable, the new trading entity re-employs all staff and assumes liability for their employee entitlement (except for superannuation).

The old company is then liquidated.

  • Director Penalty

    When could I consider Business Restructure?

    A director could consider a business restructure when the business is unable to pay its debts in full through no fault of its own. Or because the director wishes to continue to pursue their interest in the industry but is unable to continue to trade under the existing company structure, and negotiations with creditors, either formal or informal, are not feasible for one reason or another.

    Rather than do any form of negotiation, a director has the option of undertaking a business restructure rather than a debt restructure. This process involves selling the required physical assets and goodwill of the business to a new trading entity.

  • Analysis

    Business Restructuring - Is it legal?

    Sometimes a business restructure is referred to as a phoenix and some people think it’s illegal. In fact, the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 specifically distinguishes between illegal phoenix activity and restructures that are done as a commercial necessity. It notes that commercial necessity restructures are beneficial to society and the economy when done properly.

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Did You Know?

Commercial Necessity Phoenix is legal and recognises the fact that sometimes the need to restructure (phoenix) may arise out of events outside of the business owner’s control. This type of phoenix is considered a business rescue.

Business Restructure

How it Works

If you are considering a business restructure, de Jonge Read will review your situation carefully. We consider both business and personal aspects.

We then prepare a written recommendation, specifically designed to your unique circumstance on how to achieve the best outcome possible for you and your business.

We do this obligation-free and at no cost to you!

  • 1 Schedule a free consultation with one of our strategists
  • 2 A no-obligation tailored strategy is prepared to suit your individual circumstances
  • 3 If you decide to proceed, you’ll have a Strategy Support Officer assigned to you. Our team is here to hold your hand throughout the whole process