Small Business Restructuring

SBR was introduced by the Federal Government on 1 January 2021 to provide better outcomes for small businesses who may be experiencing financial hardship.

It is a simplified, cost-effective debt restructuring process that allows small businesses with less than $1 million in unsecured  liabilities to continue trading. The directors and management of a company under the small business restructuring process, remain in control of the company under the supervision of a restructuring practitioner, offering a crucial opportunity for businesses to reset and realign for future success.

To be eligible for small business restructuring, the company must:

• be incorporated under the Corporations Act 2001
• have unsecured liabilities totaling no more than $1 million on the day the company enters the process, excluding employee entitlements
• have paid all employee entitlements that are due and payable
• have given returns, notices, statements, applications or other documents as required by taxation laws (but not necessarily have paid outstanding tax debts)
• resolve that it is insolvent or likely to be insolvent at some future time and that a Restructuring Practitioner should be appointed
• not already be subject to an insolvency administration or a restructuring plan
• not have been subject to, or its directors must not have utilised the SBR or Simplified Liquidation processes in the prior seven (7) years

• Directors can remain in control of the business throughout the SBR process
• All employee entitlements that are due and payable must be paid
• A higher likelihood of recovery for creditors on a portion of monies owed on debts
• The fees for the restructuring practitioner are often more budget-friendly than those associated with voluntary administration

• You are currently trading at a loss, or you have witnessed continued losses over various periods
• Statutory creditors are not being paid on time ie., State and Commonwealth taxes such as GST, payroll tax and land tax; employee superannuation, wages and/or leave entitlements
• Creditors are being paid past contract / agreed / normal industry terms
• Suppliers placing you on a Cash on Delivery arrangement or demanding special payments before resuming supply
• Cheques have been returned dishonoured or EFT’s have ‘bounced’
• Cheques are being issued but not sent or are being post-dated
• Payment demands are being received from solicitors or judgments for unpaid debts being sought
• Accounting records are not kept up-to-date and / or are hard to find when asked
• You are experiencing change in employee status – understaffed and over – stretched
• Your overdraft limit is being exceeded on a regular basis
• You are delaying payment of rent / lease; and / or
• You have limited or no access to alternative funding / finance