What is Small Business Restructuring (SBR)? - How It Works?

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  Who is eligible for Small Business Restructuring?

  To qualify for Small Business Restructuring, a business must:

  • Be incorporated
  • Be insolvent or likely to become insolvent
  • Have total liabilities of less than $1 million
  • Be up to date with employee entitlements and tax lodgements before the proposal is put to creditors
  • Ensure neither the company nor its directors (including anyone who resigned in the last 12 months) have used SBR or simplified liquidation in the previous seven years

  If a company meets these requirements, it may appoint a Small Business Restructuring Practitioner (SBRP) to help restructure its debts while continuing to trade. The de Jonge Read® team can review eligibility and help determine whether SBR is the right solution for your business.

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  What are the benefits of Small Business Restructuring?

  Small Business Restructuring offers several advantages for eligible businesses facing financial pressure. The process is designed to be faster and more cost-effective than traditional insolvency options, providing a simpler pathway for small businesses to address their debts.

  A major benefit is that directors remain in control of daily operations throughout the restructuring process. This allows the business to continue trading with minimal disruption to staff, customers, and supplier relationships.

  This “debtor-in-possession” model enables business owners to manage the restructure while maintaining stability in their operations. It helps protect the business from liquidation, supports continuity of service, and provides a practical way to negotiate affordable settlements with creditors, including the ATO.

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  How does the Small Business Restructuring Process work?

  The SBR process can take up to 35 business days and is completed in two main stages.

  • Proposal stage:
    Directors appoint a Small Business Restructuring Practitioner (SBRP) to assess eligibility and prepare the Restructuring Plan. The company has 20 business days to develop the plan, which outlines the proposed debt settlement, repayment structure, and SBRP remuneration.
  • Acceptance stage:
    Creditors have 15 business days to review and vote on the plan. Approval requires more than 50% of unrelated creditors by value. Once approved, the business continues trading while making agreed repayments, with plans lasting up to three years.

  SBR provides a clear framework to address financial challenges while keeping the business open and under the control of its directors.

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  How much does the Small Business Restructuring Plan cost?

  The cost of an SBR Plan usually ranges from $15,000 to $30,000, depending on the complexity of the business and the work required. This fee generally covers:

  • Remuneration for the appointed Small Business Restructuring Practitioner (SBRP)
    • A fixed flat fee during the proposal stage
    • A fixed percentage of the funds recovered for creditors

  All fees are agreed upfront between the directors and the SBRP.
  Despite the cost, SBR is often a highly cost-effective solution, as the reduction in debt can significantly outweigh the fees involved.

  Contact the de Jonge Read® team today to review your eligibility and obtain a customised Small Business Restructuring quote.

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  Is Small Business Restructuring popular?

  Yes. Small Business Restructuring has become a widely used alternative to ATO Payment Arrangements for businesses facing financial difficulty. SBR now represents a significant portion of insolvency appointments across Australia, with more directors choosing it for its flexibility and ability to keep the business trading during the restructure.

  While SBR continues to be a popular option, the ATO is applying greater scrutiny to restructuring proposals. This includes tighter assessment of eligibility, more detailed reviews of company records and lodgements, and closer examination of proposed creditor returns.

  Even with these changes, SBR remains an effective and viable solution for many small businesses seeking to reduce debt, resolve ATO pressure, and continue trading.

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