How to turn a $1.5 million debt into a proposal creditors can back

Creditors back the better option

A director staring at $1.5 million of debt does not win support by sounding confident. Creditors compare your proposal with the alternative, usually liquidation or administration. ASIC says a DOCA aims to keep the business going where possible, or provide a better return than winding up. business.gov.au says creditors decide between the available options. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/deed-of-company-arrangement-for-creditors/?utm_source=openai))

That means the proposal has to answer three questions at once. Where will the money come from, what will creditors receive, and why is this better than waiting for the company to collapse? The clearer that comparison is, the easier it is for creditors to see the plan as practical rather than hopeful. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/deed-of-company-arrangement-for-creditors/?utm_source=openai))

Build the numbers before the meeting

Build the 13-week forecast from the bank balance, committed receipts and unavoidable outgoings. Leave out hoped-for jobs and friendly assumptions. ASIC says directors must keep themselves informed about the company’s financial position and keep adequate financial records, so the forecast should come from records you can explain, not memory in a meeting. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/?utm_source=openai))

Then stretch the same assumptions into a 12-month view. If the short-term cash picture says one thing and the annual view says another, fix the gap before you speak to creditors. A proposal that only works in a perfect month three will not inspire confidence when real trading starts to drift. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/?utm_source=openai))

Source: Official guidance

Show the downside in plain figures

Prepare a simple liquidation comparison beside the proposal. Estimate asset sales, likely recovery costs and what unsecured creditors might receive if the company were wound up now. ASIC and business.gov.au both frame external administration around that same creditor test, so the downside view should be honest, not padded with wishful numbers. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/deed-of-company-arrangement-for-creditors/?utm_source=openai))

Use assumptions that a creditor can interrogate. Show how much stock might be sold, what debtor collections are realistic, whether plant or vehicles are secured, and what sale costs will bite first. If the return to unsecured creditors is small, say so. Credibility is more persuasive than a glossy spreadsheet. ([asic.gov.au](https://www.asic.gov.au/for-business-and-companies/companies/company-deregistration-and-winding-up/wind-up-an-insolvent-company?utm_source=openai))

Make the offer fit the cash

Make the offer fit the cash the business can actually produce. That may be monthly instalments, a lump sum from asset sales, or a mix of both. Under small business restructuring, affected creditors decide whether to accept the plan, so the offer must be payable without relying on perfect trading. ([business.gov.au](https://business.gov.au/exiting/bankruptcy-and-insolvency/insolvency-for-companies?utm_source=openai))

Leave room for tax, wages, super and normal overruns. A plan that strips all spare cash out of the business may look bold on paper and fail in practice. If the numbers only work by ignoring current obligations, the offer is too tight and creditors are likely to see that quickly. ([business.gov.au](https://business.gov.au/exiting/bankruptcy-and-insolvency/insolvency-for-companies?utm_source=openai))

Put it to creditors early

Get the package in front of creditors early, before frustration hardens into a wind-up push. Send the forecasts, the liquidation comparison and a short note explaining why the offer is better than the alternative. The earlier creditors see the whole picture, the more time you have to answer questions and adjust terms. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/deed-of-company-arrangement-for-creditors/?utm_source=openai))

Today, pull the records together, write the offer terms and check whether any urgent deadline is already in play. Then contact CRP about debt restructuring. CRP can help coordinate the proposal with independent qualified professionals, but it is not a law firm and does not promise a result for creditors or directors. ([asic.gov.au](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/?utm_source=openai))