Many small businesses, especially those in coronavirus-hit sectors such as retail, property and tourism face potential financial failure this year as government assistance winds down.

Despite Australia’s speedier-than-expected recovery, thousands of small businesses face tough times ahead.

With this in mind, boutique Sydney advisory Olvera Advisors has launched Olvera First, an innovative restructuring program for small business.

Debtor in possession restructuring

Olvera Advisors partner Kate Barnet says the ground-breaking program – the first of its kind in Australia – was designed to streamline the small business restructuring process. This makes it as simple and convenient as possible for eligible companies to use to get back on their feet.

“It’s really the first time in Australia we’ve had a debtor in possession restructuring process,” says Barnet, a registered liquidator and a bankruptcy trustee.

“It’s really the first time in Australia we’ve had a debtor in possession restructuring process.”

“Traditionally in Australia, we have had a very creditor-led process where an insolvency practitioner takes control of the business. But with this process the debtor, or the company that’s having difficulties, is the entity that’s in control of the process.”

She says a big plus of this approach is that it keeps owners at the centre of the process.

Under the program, small businesses can trade for up to 35 business days while a debt restructuring plan is agreed to between owners and suppliers.

“The company, or the director of the company, gets to continue to trade the business, gets to open the doors every morning, gets to still employ the staff,” Barnet explains.

“For instance, if it’s a cafe they get to continue making coffees as opposed to someone else doing it on their behalf. The business continues to trade and that’s the key outcome of this process: to try to get these businesses to continue through a restructure.”

The process aligns with the Australian government’s reforms for small business restructure and insolvency, which came into effect on 1 January 2021.

“We are waiting for the government to put more emphasis on raising awareness around the new small business restructuring process,” says Barnet.

An affordable solution

Another advantage of keeping business owners in the driving seat, Barnet says, is that it makes restructuring more affordable by avoiding unnecessary duplication of work.

She says in the past duplication has often led to a “massive layer of costs” for small businesses.

“Think about the duplication of work that’s required where an insolvency practitioner who has never been involved in the business has to get across all the operating issues,” she says.

“In the past, in particular for companies at the small end of the market, that has made it prohibitive for any kind of real restructure because of the costs that are imposed.”

A streamlined process

When it comes to the nuts and bolts of the program, Barnet says this, too, has been designed with the particular needs of small businesses front of mind.

It begins with a simple eligibility assessment followed by a straightforward step-by-step process via an online portal, which acts as a “personal dashboard” for business owners.

This allows those taking part to easily upload and review documents; view invoices and make payments; book appointments; and monitor progress and supplier responses.

It’s all part of Olvera’s desire to “change the mindset” around small business restructuring, says Barnet. “It’s about looking at businesses and saying that restructuring is a normal part of business.

“The reality is that not everyone is going to have a 100% successful business. But if you create the mindset when people become accustomed to doing deals, I think it creates less fear of failure.”

Find out more:

Visit https://olverafirst.com/