Should SBRPs be more flexible?

One of the quirks of SBRs is that once a SBR Plan has been proposed it cannot be varied by the company, the practitioner or the creditors. Only the Court can vary the Plan (s548B(2)).

On the one hand, this is sensible as the process is designed to be quick and cheap, companies should make their best proposal, not engage in horse trading or a process of attrition. On the other hand, where a genuine mistake or oversight occurs, at least one opportunity to correct the course still seems reasonable. The cost of a Court application may be prohibitive. In the only reported case to date, the SBR invited creditors to change their vote before approaching the Court anyway.

The ATO has avoided this lacuna by requiring SBRs to consult before proposing the Plan, but most creditors do not get this opportunity.

ARITA's short term reforms include an option for plan variations proposed by the company, with an additional fixed fee, explained by the SBR and sent to creditors to vote. Personally, I think allowing a single variation of the Plan is a sensible compromise balancing the restructuring object, cost and creditors’ interests.