Service

Small Business Restructuring (SBR)

Small Business Restructuring is Australia's director-led alternative to voluntary administration. For eligible companies, it allows directors to retain control while a registered practitioner helps develop a plan to compromise debts with creditors — at a fraction of the cost and disruption of formal administration.

Overview

What Small Business Restructuring is, and why it exists

Small Business Restructuring (SBR) was introduced into the Corporations Act in 2021, as Part 5.3B, in response to a long-standing problem: voluntary administration is the right answer for some companies but the wrong answer for many others. It is expensive, disruptive, removes directors from control, and frequently results in liquidation regardless. For genuinely viable small companies with manageable debt levels, voluntary administration was a sledgehammer where a scalpel was needed.

SBR is the scalpel. Eligible companies — broadly, those with total liabilities under a statutory threshold and no recent prior insolvency events — can appoint a Small Business Restructuring Practitioner (SBRP), retain control of operations, and propose a restructuring plan to creditors. Creditors vote on the plan. If accepted, the plan is binding on all unsecured creditors and the debts are compromised on the agreed terms. The company emerges with debt restructured, directors still in control, and trading continuing.

The process is faster and cheaper than voluntary administration. It is also more demanding in some respects — the company must be genuinely viable on a going-forward basis, certain conditions must be satisfied during the process, and the plan must be one that creditors will actually vote for.

In Practice

How we work on Small Business Restructuring

Our role in Small Business Restructuring is the strategic advisory work — the work of figuring out whether SBR is the right path, what plan creditors will actually accept, how the company should engage with the ATO and other creditors during and after the process, and what the company needs to look like on the other side. The Small Business Restructuring Practitioner is a separate appointment (a registered liquidator), and we coordinate with them throughout.

Eligibility assessment. SBR is only available to companies meeting specified eligibility criteria — total liabilities below the statutory threshold, no current insolvency event, certain reporting obligations met, no recent prior use of SBR or VA. Eligibility is checked before anything else.

Viability assessment. The plan must be one a reasonable creditor would accept. That means the company must be genuinely capable of meeting the plan terms going forward. We work through cash flow, operational position, contract base, and competitive landscape — honestly. SBR is not a way to delay the inevitable; it is a way to fix what is fixable.

Plan design. The restructuring plan defines what creditors are offered. The design has to balance what the company can sustain (lower payments stretch viability) against what creditors will accept (higher payments improve voting outcomes). The ATO's position is usually decisive — for most small businesses, the ATO is the largest creditor, and the ATO's vote often determines the outcome. We design plans with the ATO's policy positions and likely response in mind.

Practitioner appointment and process management. Once the plan is conceptually settled, we coordinate appointment of an appropriate SBRP and support the company through the formal process — the practitioner's independent role, the creditor proposal, the vote, and where successful, the implementation of the plan.

Post-plan trading. After the plan is accepted and implemented, the company emerges with restructured debt and ongoing obligations under the plan. The forward work is making sure the company actually performs against the plan — the structures, processes, and disciplines that produced the original problem usually need to change too.

Questions Directors Ask

Questions directors ask first

Is my company eligible for SBR?
Eligibility criteria are set out in the Corporations Act and supporting regulations. The headline tests are: total liabilities below the statutory threshold (currently $1 million, although this can change), the company is incorporated under the Corporations Act, no insolvency event currently in progress, all employee entitlements paid, all tax lodgements substantially up to date, and no prior use of SBR or voluntary administration in the previous seven years. Each of these has nuances — eligibility assessment is itself technical work.
How long does SBR take?
The statutory framework provides a 20 business day proposal period (during which the plan is developed) followed by a 15 business day acceptance period (during which creditors vote). End-to-end, the formal process is typically eight to ten weeks. The strategic and plan-design work in the lead-up usually adds another two to four weeks before the formal appointment.
Will creditors actually vote in favour of an SBR plan?
Often, yes — if the plan is well-designed and well-presented. Creditors generally accept plans that offer materially better recovery than the realistic alternative (which is usually liquidation with limited or no return). Plans that offer creditors a fraction more than they would otherwise expect, paid over a manageable period, are routinely accepted. Plans that ask creditors to absorb most of the loss are routinely rejected. The ATO's position is usually decisive, and the ATO has published guidance on what it looks for in SBR plans. We design plans with that guidance in mind.
What happens if the plan is rejected?
If the plan is not accepted by creditors, the SBR process ends without a plan. The company is then in the same position it was in before SBR (still subject to its existing debts) but with the additional context of having unsuccessfully attempted a restructure. The next decision is usually voluntary administration, liquidation, or a renewed attempt at informal restructuring, and the choice depends on the reasons the SBR failed. We assess this as part of the strategic work upfront — entering SBR without a realistic prospect of plan acceptance is rarely the right path.

Related Services

Adjacent areas of our practice

Most engagements involve more than one of these. The four pillars are designed to work together.

Pre-Insolvency Planning

Where SBR is one of several options being weighed.

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ATO Debt Negotiation

The ATO's position usually determines SBR outcomes.

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DPN Defence

Appointing an SBRP is a recognised DPN response option.

Read more →

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