If your business is under financial pressure, figuring out your next move can be overwhelming. You’ve probably heard of Small Business Restructures (SBRs) as a fast and cost-effective way to sort things out – and for many businesses, they absolutely are.
But what if your business doesn’t qualify for an SBR? Or if your situation is a bit more complicated?
That’s where Voluntary Administration (VA) can be the right move – if it’s used the right way.
Why so many small businesses are choosing SBRs
SBRs were created especially for small businesses. They’re quick, relatively affordable, and allow business owners to stay in control while restructuring. You can keep trading, your customers might not even notice, and you get a chance to manage debts without closing down.
It’s no surprise they’re popular – they work well and up until recently, have a strong success rate.
But not everyone is eligible for an SBR – and even if you are, it might not always be the best choice.
So, what about Voluntary Administration?
VA has been around a lot longer than SBRs. It’s typically more expensive – around $60,000 to $120,000 – and it means handing control of the business to an independent administrator.
That might sound like a big step, and it is. But sometimes, it’s exactly what’s needed.
At de Jonge Read®, we still recommend VA in situations where:
- Your debts are over the SBR limit (more than $1 million).
- There are complicated issues with creditors or legal matters.
- The company structure (such as family trusts or multiple directors) creates complexity.
- Creditors need reassurance that someone independent is in charge.
In other words, if your situation is complex or high-risk, VA can be the smarter move – if it’s handled properly.
Making VA work better for your business
A lot of business owners are hesitant about VA because of the cost and the loss of control. But with the right planning, there are ways to manage both.
Here’s how we help:
- Keep you involved: Before the administrator steps in, we can arrange a management or licence agreement that allows you (or someone you trust) to keep the business running. This helps minimise disruption and can reduce costs.
- Avoid the “VA stain”: Instead of going through a formal deal with creditors (called a Deed Of Company Arrangement (DOCA)), we can use something called a creditors’ trust. This removes the ongoing “under administration” tag, which helps protect your business’s reputation post-restructure.
SBR vs VA: A Quick Comparison
What We’ve Seen at de Jonge Read
We’ve helped business owners navigate both SBRs and VAs, and we know when each one is the right move. Across the country, only 20% of businesses going through VA succeed. But at de Jonge Read®, our success rate in getting proposals accepted through VA? 100% in FY23/24.
That result isn’t by chance. It’s the result of strategy, experience, and tailored planning.
What should you do next?
If your business is under pressure, don’t wait. The earlier you act, the more options you’ll have and the better your chance of recovery.
Whether SBR or VA is the best path depends on:
- Your total debts.
- How your business is structured.
- How complex your creditor relationships are.
- What you want to achieve for your business and personally moving forward.
We’ll help you assess all of this and guide you every step of the way.
Talk to us at de Jonge Read®
Every day, we help business owners like you find the right path forward. We know what works based on each unique situation, and we’re here to make sure you get the best chance at a fresh start.
Reach out today and let’s explore what will work best for your situation.
Did you know?
Phoenixing is another name of business restructure. Read more about business restructures and when this can be an option for you.
