Small Business Restructuring (SBR): Is It Right for Your Business?

If your small business is struggling with debts it can no longer service — whether owed to the ATO, trade creditors, or lenders — you may have heard the term "Small Business Restructuring" (SBR) mentioned as a possible solution. But what is it, exactly? And is it the right option for your business?

This guide explains the SBR process in plain English: how it works, who qualifies, what it costs, and — critically — when it is not the right answer.

What Is the Small Business Restructuring Process?

The Small Business Restructuring process was introduced in January 2021 as part of the Australian Government's reforms to the Corporations Act 2001. It was designed specifically to address a gap in Australia's insolvency framework: the lack of a cost-effective, director-friendly restructuring option for genuinely small businesses.

The key feature that distinguishes SBR from other formal insolvency processes is this: directors remain in control of the business throughout the process. Unlike voluntary administration, where an external administrator takes over and directors effectively step aside, SBR allows the company to keep trading, keep its staff, keep its contracts, and keep its relationships — while a registered practitioner works alongside the directors to develop a proposal for creditors.

Is My Business Eligible?

To access the SBR process, a company must satisfy all of the following eligibility criteria:

• Total liabilities of less than $1 million at the time the practitioner is appointed. This includes all debts — ATO, trade creditors, bank loans, related party loans, everything.
• Tax and superannuation lodgements are up to date. The ATO takes a hard line on this. If your BAS returns, income tax returns, or SGC statements are not lodged, you will generally need to get them lodged before you can access SBR.
• No use of SBR or voluntary administration in the past 7 years. The process cannot be used repeatedly — it is designed for companies that genuinely have a viable business but are temporarily overwhelmed by debt.
• The company is, or is likely to become, insolvent. SBR is not available to solvent companies.
• Directors have not been bankrupt or used personal insolvency agreements in the past 7 years.

How Does the SBR Process Work?

The SBR process follows a defined structure under the Corporations Act:

Step 1: Appoint a Small Business Restructuring Practitioner

The directors appoint a registered Small Business Restructuring Practitioner (SBRP). This is a registered liquidator who has been specifically approved to act as an SBRP. Unlike a voluntary administrator, the SBRP does not take control of the company — they work alongside the directors.

Step 2: Develop the Restructuring Plan (20 Business Days)

Once appointed, the SBRP has 20 business days to work with the directors to develop a restructuring plan. The plan sets out how creditors will be treated — typically, a proposal to pay creditors a percentage of what they are owed over a defined period, funded from trading income, asset sales, or other sources.

During this period, there is an automatic moratorium (stay) on most creditor enforcement actions. Creditors cannot pursue legal proceedings, enforce security, or take other action against the company while the plan is being developed — giving the directors breathing room to trade and plan.

Step 3: Creditors Vote

Creditors are given 15 business days to vote on the plan. The plan is approved if a majority (by value) of creditors vote in favour. Related party creditors (such as directors' loans) are excluded from the vote.

Step 4: Plan Implementation

If the plan is approved, the SBRP oversees implementation. If creditors reject the plan, the company must consider other options — which may include voluntary administration or liquidation.

What Does SBR Cost?

Cost is one of the SBR process's key advantages over voluntary administration. While fees vary by practitioner and the complexity of the matter, the SBR process is typically significantly cheaper than a full voluntary administration — partly because the directors remain in control and do much of the work themselves.

That said, practitioners' fees are not trivial. Typical SBR engagements range from approximately $10,000 to $30,000+ depending on complexity, creditor numbers, and the practitioner's hourly rates. These costs need to be factored into the restructuring plan itself.

When Is SBR Not the Right Answer?

SBR is a powerful tool, but it is not always the right one. It is unlikely to be appropriate when:

• The underlying business model is not viable — SBR is about resolving a debt problem, not rescuing a fundamentally broken business
• Total liabilities exceed $1 million
• There are significant Director Penalty Notice (DPN) liabilities — SBR does not directly protect directors from personal liability under a DPN
• Key creditors (particularly the ATO) are unlikely to support a plan that offers less than full repayment, and there is no realistic way to fund a viable offer
• The company has significant assets that would be better realised in an orderly liquidation
• There is already a winding up application or statutory demand with only days remaining

In these situations, other options — including voluntary administration, a Deed of Company Arrangement (DOCA), or an orderly liquidation — may deliver a better outcome for both the company and its creditors.

How Do I Find Out If SBR Is Right for Me?

The honest answer is: you need to speak to someone who has actually run SBR processes and understands the real-world factors that determine whether a plan will get up with creditors. The legislation tells you the rules. Experience tells you what actually works.

At Tax Help Debt Assist, we can help you understand whether your company meets the eligibility criteria, whether the business is genuinely viable, whether the ATO is likely to support a plan, and what realistic options exist if SBR is not available to you. All guidance is free and confidential.