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 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.

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

• be incorporated under the Corporations Act 2001
• have 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

• A restructuring plan specifies the remuneration that the Restructuring Practitioner is entitled to receive
• 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