So what happens if creditors do not accept the plan? The directors can then consider options that include Voluntary Administration or the simplified liquidation process.
Of course, there are safeguards designed to protect creditors from abuse of the process including:
- Where the liquidator forms the view the company or a director has engaged in fraud or dishonest conduct that has, or is likely to have, a material adverse effect on the interests of creditors, the simplified liquidation process is taken to have ceased from the day the liquidator forms that view. The liquidation will then proceed in accordance with the usual process;
- related creditors are unable to vote on the restructuring plan;
- businesses are unable to act outside of the …
