Small Business Restructuring

Small Business Restructuring (SBR) is an Australian Federal Government initiative designed to assist small businesses facing financial hardship. Under the SBR process, small businesses with less than $1 million in unsecured liabilities can engage a Registered Liquidator as a Restructuring Practitioner to help them negotiate with creditors and formulate a single, cents-in-the-dollar payment plan. This process allows business owners to remain in control of their operations while working toward a solution that benefits both the business and its creditors.

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

If your small business is struggling with financial difficulties but you want to avoid liquidation, Small Business Restructuring may be the ideal solution. It’s an opportunity to restructure your debt and keep your business running while addressing creditor demands.

If you’re uncertain whether SBR is right for your business, don’t hesitate to contact us for an obligation-free consultation. Our experienced SBR practitioners can assess your situation and guide you through the process, ensuring you understand all your options and are well-informed before making any decisions.