SBR Explained: The Government Process That Could Save Your Business

TL;DR: Small Business Restructuring (SBR) is a government-backed insolvency process under the Corporations Act 2001, available to Pty Ltd companies with liabilities under $1,000,000. ASIC Report 810 shows 3,388 SBR appointments, an 87% plan approval rate, and 93% of companies still trading post-SBR. The ATO votes yes over 90% of the time. Typical debt reduction is 60-80%, with median practitioner fees of $16,137.

Small Business Restructuring (SBR) is one of the most significant changes to Australian insolvency law in decades. Yet most business owners have never heard of it.

If you’re struggling with business debt, SBR could be the lifeline you need. Here’s everything you need to know.

What Is Small Business Restructuring (SBR)?

SBR is a formal, government-backed process that allows eligible small businesses to restructure their debts while keeping the business alive and the directors in control.

Introduced in January 2021, it was designed specifically for small businesses that:

• Are fundamentally viable
• Have accumulated unsustainable debt
• Need a fresh start without closing down

Think of it as a middle ground between struggling on with unmanageable debt and closing the business entirely.

How the SBR Process Works: Step-by-Step Overview

1. You appoint a licensed restructuring practitioner
2. You continue running your business (you stay in control)
3. Together, you develop a plan to pay creditors a reduced amount
4. Creditors vote on the plan
5. If approved (87% are), you pay the reduced amount over up to 3 years
6. When complete, the remaining debt is gone

The key insight: you’re paying what you can afford, not what you originally owed.

SBR Success Rates and Key Statistics (ASIC Report 810)

Based on ASIC Report 810:

• 3,388+ SBR appointments since July 2022
• 87% of plans are approved by creditors
• 93% of businesses are still trading after SBR
• 60-80% typical debt reduction
• $15,000-$30,000 typical total cost

These numbers tell a clear story: SBR works, and it works often.

SBR Eligibility Criteria: Who Qualifies for Small Business Restructuring?

To use SBR, your business must meet these criteria:

1. Pty Ltd Company

SBR is only available for proprietary limited companies. Sole traders and partnerships can’t use it (though they have other options).

2. Under $1 Million in Liabilities

Total debts (excluding employee entitlements) must be under $1 million. This is the “small business” part of Small Business Restructuring.

3. Tax Lodgements Up to Date

Your BAS, tax returns, and other lodgements must be current or close to it. If you’re behind, you may need to catch up first.

4. Not Already in Administration

You can’t use SBR if your company is already in liquidation or voluntary administration.

5. The 7-Year Rule

No director of the company can have used SBR in the previous 7 years.

The SBR Process: Detailed Step-by-Step Timeline

Step 1: Initial Assessment (Week 0)

Before anything formal happens, you’ll have a conversation with a restructuring practitioner. They’ll assess your eligibility, understand your situation, and explain the likely costs and outcomes.

This is usually free and non-binding.

Step 2: Appointment (Day 1)

If you decide to proceed, the company’s board resolves to appoint the restructuring practitioner. ASIC is notified, and the process formally begins.

Critical: From this moment, creditor enforcement stops. Garnishee notices, legal action, and recovery efforts are all paused.

Step 3: Restructuring Phase (Days 1-20)

Over the next 20 business days:

• The practitioner investigates your financials
• You continue running the business normally
• Together, you develop a restructuring plan
• The plan proposes how much creditors will be paid (cents in the dollar)

Step 4: Creditor Voting (Days 21-35)

The plan is sent to all creditors, who have 15 business days to vote.

For the plan to pass, creditors representing 50%+ of the debt by value must vote in favour.

Good news: the ATO, often the largest creditor, votes yes over 90% of the time.

Step 5: Plan Execution (Up to 3 Years)

If the plan is approved:

• You make the agreed payments according to the schedule
• The practitioner oversees the plan
• Your business continues operating
• When complete, the remaining debts covered by the plan are released

SBR vs Payment Plans, Voluntary Administration, and Liquidation

vs Payment Plans

With a payment plan, you pay 100% of the debt plus interest. With SBR, you might pay only 20-40%.

vs Voluntary Administration

In VA, an external administrator takes control of your business. In SBR, you stay in control. VA also costs $50,000+ compared to $15,000-$30,000 for SBR.

vs Liquidation

Liquidation ends your business. SBR saves it.

How Much Does SBR Cost? Median Fees and Total Costs

According to ASIC:

• Restructuring phase: ~$16,000 median
• Plan administration: ~$6,700 median
• Total: $15,000-$30,000 typically

This might sound like a lot, but consider: if you reduce $300,000 in debt to $90,000, you’ve saved $210,000 for a $25,000 investment.

Most practitioners offer fixed fees, so you know the cost upfront.

Does the ATO Support SBR Plans?

Yes — and this surprises many business owners.

The ATO votes in favour of SBR plans over 90% of the time when they’re a creditor. Why?

1. They usually receive more through SBR than they would through liquidation
2. A surviving business pays future taxes
3. SBR is a legitimate, government-sanctioned process

If the ATO is your biggest creditor (and they often are), this is very good news.

Is Small Business Restructuring Right for Your Company?

SBR is ideal if:

• Your business is fundamentally viable (it can make money)
• You’ve accumulated debt that’s now unsustainable
• You want to keep your business and stay in control
• You meet the eligibility criteria

SBR might not be right if:

• Your business model is broken regardless of debt
• You’re ready to walk away and start fresh
• Your debts exceed $1 million

The Next Step

If you think SBR might be right for your business, the next step is simple: check your eligibility.

Answer a few questions about your situation, and you’ll know quickly whether SBR could work for you. From there, you can speak with a licensed practitioner who can give you specific advice.

Don’t wait until enforcement action forces your hand. The earlier you explore your options, the more options you’ll have.