Struggling business owners have been thrown a lifeline via the biggest shake-up to insolvency laws in 30 years.

The new system will allow businesses with debts of less than $1 million to trade their way out of insolvency and remain in control of their firm while a restructuring plan is drawn up with the assistance of an insolvency consultant.

Creditors will then assess the viability of the plan and vote on whether the business should proceed or be wound up.

Treasurer Josh Frydenberg tells Brooke Corte says the changes will help viable businesses doing it tough get to the other side.

“Too often when you go through an insolvency process, what is left of the assets of a company are eaten away with lawyer fees and accountancy fees,

“This allows the business to work out its own plan with professional advice, put it to the creditors, and still stay in control,”

Click play to hear the full interview: