Small Business Restructuring Australia — Reduce ATO Debt, Keep Trading

Small Business Restructuring is a government-backed process introduced in January 2021 that allows eligible Pty Ltd companies with debts under $1 million to restructure their debts while the directors remain in control of the business. It's designed to help viable businesses recover from financial distress without going into liquidation.

To be eligible for SBR, your business must be a Pty Ltd company with total liabilities under $1 million. Your tax lodgements must be up to date (or close to it), you cannot already be in liquidation or external administration, and no director can have used the SBR process in the past 7 years.

Based on ASIC data, businesses typically see debt reductions of 60-80% through SBR. However, the exact amount depends on your specific circumstances and what creditors will accept. The proposed payment must offer creditors a better return than they would receive if the company went into liquidation.

According to ASIC Report 810, the median cost for the restructuring phase is approximately $16,137, with an additional median cost of $6,739 for the plan administration phase. Total costs typically range from $15,000 to $30,000, which is significantly less than voluntary administration (often $50,000+).

The initial restructuring phase takes 20 business days, followed by 15 business days for creditors to vote on the proposed plan. If approved, the plan can run for up to 3 years. Most businesses know within 5-6 weeks whether their plan has been accepted.

Yes, one of the key benefits of SBR is that directors retain control of the business throughout the process. Unlike voluntary administration, you continue to run day-to-day operations while working with the restructuring practitioner to develop a plan.