Business owner reviewing debt reduction strategy with advisor

Real Results

How Much Debt Can SBR Reduce?

Q: How much debt can be reduced through SBR?

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.

Q: Will the ATO accept an SBR plan?

The ATO has shown strong support for SBR, approving over 90% of plans where they are a creditor. The ATO recognises that receiving a reduced payment through SBR is often better than receiving nothing through liquidation. However, your tax lodgements must be up to date for the ATO to support your plan.

Q: Does every business achieve 60-80% reduction?

No. This is a typical range, not a guaranteed outcome. Actual reductions depend on creditor support, liquidation baseline, and plan affordability.

Q: How quickly do savings occur?

You generally know the plan outcome after the voting period. Debt relief is realized through approved plan terms over time.

Q: What if creditors reject the plan?

If the plan is not approved, directors must move quickly to alternative options such as renegotiation, VA, or liquidation.

Based on ASIC data and real outcomes, businesses typically reduce their debts by 60-80% through Small Business Restructuring.

TL;DR

→ Typical reduction range — SBR reduces eligible business debts by 60–80%, though outcomes vary by creditor support, business viability, and plan quality
→ Reducible debts — ATO debt (GST, PAYG, income tax), trade creditors, unsecured loans, business credit card debt, commercial rent arrears, and professional fees
→ Non-reducible debts — employee entitlements (wages, superannuation, leave), secured debts (unless the creditor agrees), personal guarantees, and debts incurred after appointment
→ Better than liquidation test — the restructuring plan must offer creditors more than they would receive if the company were wound up
→ Creditor approval process — plans are approved by 50%+ of creditors by dollar value within 15 business days; ATO has a 90%+ approval rate for viable SBR plans
→ ASIC Report 810 results — overall 87% plan approval rate and 93% of companies still trading post-SBR
→ Eligibility and control — available to companies with total liabilities under $1,000,000 under Part 5.3B of the Corporations Act 2001; directors retain control throughout

60-80%

Typical debt reduction through SBR

Based on ASIC data and industry outcomes

Important: 60-80% is a common range, not a guarantee. Actual outcomes vary by debt mix, creditor voting, business viability, and plan execution.

Case Studies

Real Small Business Restructuring Debt Reduction Examples

Anonymised examples of actual debt reductions achieved through SBR. Results vary based on individual circumstances.

Common reduction range

60-80%

Typical decision window

5-6 weeks

Core voting threshold

50%+ by value

Construction Queensland

Debt Before

$420,000

Debt After

$126,000

70%

Debt Reduced

Saved $294,000

Hospitality Melbourne

Debt Before

$381,000

Debt After

$150,000

61%

Debt Reduced

Saved $231,000

Trades Perth

Debt Before

$185,000

Debt After

$55,000

70%

Debt Reduced

Saved $130,000

Retail Sydney

Debt Before

$290,000

Debt After

$87,000

70%

Debt Reduced

Saved $203,000

Transport Brisbane

Debt Before

$510,000

Debt After

$153,000

70%

Debt Reduced

Saved $357,000

Quick Estimator Framework

How to Estimate Your SBR Debt Reduction

Map total eligible debt

Separate reducible company debt from protected/non-reducible obligations.

Model liquidation return

Estimate what unsecured creditors would receive in liquidation.

Set affordable plan payments

Build a realistic payment schedule from forecast cash flow.

Test creditor support

Check whether the proposal is likely to pass by value voting.

How It Works

How SBR Debt Reduction is Determined — Better Than Liquidation Test

The amount of debt reduction possible depends on several key factors.

Plan Quality

Reduction outcomes depend on cash reality, not headline percentages

Strong plans usually combine credible repayment capacity with a clear better-than-liquidation case and disciplined execution after approval.

Model from current cash flow

Base repayment levels on current operating cash flow rather than optimistic forecasts.

Show better-than-liquidation case

Demonstrate exactly why the proposal beats liquidation returns for creditors.

Protect delivery capacity

Maintain capacity so plan payments can be sustained over the full term.

Advisor and director reviewing debt reduction model and cash flow

Better Than Liquidation Test

Your plan must offer creditors more than they would receive if the company went into liquidation. This sets the floor for possible reductions.

Business Viability

Creditors need confidence your business can actually make the proposed payments over the plan period.

Creditor Composition

ATO generally supports viable plans (90%+ approval rate). Trade creditors may prefer ongoing relationships.

The "Better Than Liquidation" Test

The key principle behind SBR debt reduction is that your proposed payment must offer creditors a better return than they would receive if the company went into liquidation.

Assets valued at liquidation prices (often 20-50% of book value)

Priority debts deducted (employee entitlements, liquidator costs)

Calculation of what unsecured creditors would receive

Proposed payment that exceeds this amount

Debt Types

Which Debts Can Be Reduced Through Small Business Restructuring?

Understanding which debts can and cannot be included in an SBR plan.

Can Be Reduced

ATO debt (GST, PAYG, income tax)
Trade creditors and suppliers
Unsecured loans
Business credit card debt
Commercial rent arrears
Professional fees owed

Cannot Be Reduced

Employee entitlements (wages, super, leave)
Secured debts (unless creditor agrees)
Personal guarantees (separate from company)
Debts incurred after appointment
Fines and penalties (some types)

Important Note About Employee Entitlements

Employee entitlements (wages, superannuation, and leave) are protected and cannot be reduced under an SBR plan. This is a key difference from other insolvency processes and provides important protections for your staff.

Common Questions

Frequently Asked Questions About SBR Debt Reduction

How much debt can be reduced through SBR?

Will the ATO accept an SBR plan?

Does every business achieve 60-80% reduction?

How quickly do savings occur?

What if creditors reject the plan?

View all FAQs

Business owner calculating debt savings and next restructuring steps

Estimate your potential outcome

Estimate Your Small Business Restructuring Savings

Check your eligibility and speak with a practitioner about your specific situation.

Check Your Eligibility

How Much Debt Can SBR Reduce?

Real Small Business Restructuring Debt Reduction Examples

How to Estimate Your SBR Debt Reduction

Map total eligible debt

Model liquidation return

Set affordable plan payments

Test creditor support

How SBR Debt Reduction is Determined — Better Than Liquidation Test

Reduction outcomes depend on cash reality, not headline percentages

Model from current cash flow

Show better-than-liquidation case

Protect delivery capacity

Better Than Liquidation Test

Business Viability

Creditor Composition

The "Better Than Liquidation" Test

Which Debts Can Be Reduced Through Small Business Restructuring?

Can Be Reduced

Cannot Be Reduced

Important Note About Employee Entitlements

Frequently Asked Questions About SBR Debt Reduction

Estimate Your Small Business Restructuring Savings

Don't Wait Until It's Too Late