Small Business Restructure: A Lifeline or a Risky Gamble

Small Business Restructuring (SBR) was introduced in January 2021 as a fast track solution for distressed businesses to regain control and reduce debts without handing over the reins to an external administrator. Done properly, it offers a rare opportunity to turn crisis into opportunity.

But here’s the reality: it’s not a free swing. If creditors reject the plan, the company loses access to the SBR pathway for the next seven years. That’s a long time to wait, especially if the proposal isn’t handled strategically. You get one shot, so it needs to be the right one.

SBR was designed as a practical, affordable alternative for small businesses to restructure their debts while continuing to trade. But increasingly, the process is being rushed or misused. Weak proposals, unrealistic cashflow forecasts, poor creditor engagement — these missteps are all too common.

The result? A loss of trust from creditors.
And that’s showing up in the numbers.

In FY23, industry wide SBR proposal approvals sat at around 88%, dipping slightly to 87% in FY24. However, by early 2025, that figure has dropped significantly, with some reports suggesting a decline of more than 20% as creditor scrutiny intensifies. The ATO, in particular, has toughened its stance, closely examining compliance history, director related loans, and the commercial viability of restructure plans. While the construction and hospitality sectors make up the bulk of SBR activity, accounting for roughly half of all appointments, the overall success rate now sits closer to 65. In contrast, de Jonge Read has maintained a 79% success rate in 2025, still well above many in the market by prioritising strategy, transparency, and proactive creditor engagement.

To succeed, a restructure plan must earn the confidence of creditors. From the frontlines, we know that means:

• A fair return — creditors expect a commercially realistic outcome
  • Strong compliance history, particularly with the ATO
  • Open communication, especially with major stakeholders like landlords, trade suppliers or banks
  • Disclosure of related party loans or conflicts that might impact fairness
  • Evidence of change — what’s different now that will prevent further decline?

This is not about ticking a box or rushing to lodge a form. It’s about presenting a plan that stands up to scrutiny and shows how the business will move forward sustainably.

SBR isn’t broken, it’s just being misused. When done properly, it remains one of the most powerful tools available for small business owners to avoid liquidation, protect assets, and restructure debt in a fair, legal and strategic way.

That’s where the right advice matters.

At de Jonge Read, we specialise in helping distressed businesses take action before it’s too late. As of August 2025, 80% of the SBR proposals we’ve managed have been accepted by creditors — a result that stands well above the declining national trend.

That’s because we don’t rush. We take the time to:

• Screen eligibility and suitability from the outset
  • Work with business owners and their accountants or advisers to build realistic proposals
  • Address creditor concerns upfront
  • Develop tailored strategies to protect both business and personal assets
  • Say “not yet” if we believe the proposal won’t meet expectations

We understand the pressure our clients are under, and we help them take back control with clarity, strategy, and real options.

If you’re a business owner, or advising one, considering an SBR, don’t treat it like just another process.

This is your one shot.

A failed proposal not only wastes time and money, it blocks the path to restructure for seven years. In some cases, it may also accelerate enforcement by creditors, the ATO, or liquidators.

At de Jonge Read, we provide no cost, no obligation advice that helps business owners and their advisers understand all available options, whether it’s a restructure, voluntary administration, or asset protection strategy. That advice includes a tailored roadmap to help them protect what matters most and move forward with confidence.

If you have clients in financial distress, early action is critical.