1
Upfront engagement
Most matters start with a fixed-fee engagement for the restructuring phase.
5-6 Week Process
How Small Business Restructuring Works
A step-by-step guide to the SBR process, from initial assessment to debt release. Most businesses know their outcome within 5-6 weeks. New to SBR? Start with our complete guide to Small Business Restructuring.
20
Business days to develop plan
15
Business days for voting
87%
Plan approval rate
3 yrs
Maximum plan duration
The Process
Small Business Restructuring Process: Step-by-Step Timeline
Timeline Insight
Most outcomes are known within 5-6 weeks
The first 35 business days set the trajectory. Fast preparation and disciplined communication usually improve plan quality and voting confidence.
Prepare complete records early
Avoid timeline compression by having documentation ready before appointment.
Coordinate messaging consistently
Ensure creditors see a unified plan story throughout the process.
Keep trading stability
Maintain operations while the plan and vote run in parallel.
1
Week 0
Initial Assessment
Before formally appointing a restructuring practitioner, you will have an initial conversation to:
- Discuss your business situation and debt position
- Confirm you meet the basic eligibility criteria
- Understand the fixed fees (typically $15,000-$30,000 total)
- Ask questions about the process
2
Day 1
Practitioner Appointment
When you decide to proceed, the formal process begins:
- Board resolution to appoint the restructuring practitioner
- ASIC is notified within 1 business day
- Creditor enforcement action STOPS immediately
- Protection from Director Penalty Notices kicks in
- You continue running the business as normal
ATO garnishee notices and other enforcement action halt immediately.
3
Days 1-20 (20 business days maximum)
Restructuring Phase
The restructuring practitioner investigates your business while you continue operating:
- Practitioner reviews your financials and debt position
- You continue running day-to-day operations
- Together, you develop a restructuring plan
- Plan proposes a cents-in-the-dollar payment to creditors
- Must offer creditors a better return than liquidation
4
Days 21-35 (15 business days)
Creditor Voting
The proposed plan is sent to all creditors for a vote:
- Creditors receive the plan with full details
- 15 business days to consider and vote
- Requires 50%+ by dollar value to pass
- ATO generally supports viable plans (90%+ approval)
- You receive notification of the outcome
5
Up to 3 Years
Plan Execution
If the plan is approved, the execution phase begins:
- Make the agreed payments according to schedule
- Restructuring practitioner oversees the plan
- Business continues operating normally
- On completion, remaining debts covered by the plan are released
- You emerge debt-free (within the scope of the plan)
Who Does What
SBR Roles Matrix — Director vs Practitioner vs Creditors vs ATO
The biggest concern directors raise is "will I lose control?" — the answer depends on understanding who does what during Part 5.3B. Unlike Voluntary Administration, directors retain operational control; the Restructuring Practitioner investigates and administers the plan but does not run the business.
Company directors
Retain full control of day-to-day operations, management decisions, and client/employee relationships. Supply complete financial records to the practitioner. Must pay ongoing obligations (wages, super, post-appointment debts) on current terms.
Restructuring Practitioner (RP)
Investigates eligibility and financials. Assists in preparing the plan. Issues the declaration to creditors. Administers the 15-business-day vote. Oversees plan payments over up to 3 years. Cannot take over day-to-day management of the business.
Creditors
Receive the plan with full disclosure. Have 15 business days to vote for, against, or abstain. Can lodge proof of debt with the RP. Must suspend new enforcement action during the moratorium unless the court grants leave.
Australian Taxation Office (ATO)
Votes on the plan like any other creditor — typically with over 90% approval for viable plans. Continues to receive ongoing post-appointment lodgements and payments. Garnishee notices and DPN enforcement are paused during the restructuring phase.
ASIC
Receives the notice of appointment within one business day. Publishes the appointment on the public register. Supervises practitioner compliance with Part 5.3B obligations. Does not manage the process itself — the RP does.
Creditor Vote
How the SBR Creditor Vote Works — 50% by Value Threshold
SBR uses a simpler voting framework than Voluntary Administration. The mechanics of the 15-business-day creditor vote drive plan outcomes and are worth understanding in detail:
Vote by dollar value, not head count
Approval requires more than 50% of the dollar value of votes actually cast. This is different from Voluntary Administration (which requires majority by both value and number at the second creditors' meeting).
Related creditors restricted
Votes cast by related creditors (director loans, shareholder loans, associated entities) do not count toward the approval threshold. This protects unrelated creditors from being outvoted by insiders.
Non-responding creditors
Creditors who do not vote within the 15-business-day window are treated as not voting — they do not count for or against the plan. Only the dollar value of actual votes determines the outcome.
Plan Proposal Document
Creditors receive the plan, the practitioner's declaration, a statement about the company's business and assets, and details of reasons the plan is in creditors' interests. Creditors can contact the RP for additional information during the vote period.
No physical creditor meeting
SBR does not require a formal creditor meeting (unlike VA). Creditors vote via written response. This is one of the key cost and speed advantages of SBR over VA.
Outcome notification
On close of voting, the RP notifies all creditors of the outcome. If approved, the plan takes effect and ongoing payments begin per the plan schedule. If rejected, directors must pivot to a fallback pathway (renegotiation, VA, or liquidation).
First 48 Hours of Small Business Restructuring: What to Do
When pressure is rising, early execution quality matters as much as strategy.
- Stop ad-hoc creditor promises and centralize communication
- Pull complete debt and lodgement data before first practitioner call
- Ringfence working capital for wages, tax compliance, and core suppliers
- Identify legal deadlines (DPN dates, court dates, garnishee activity)
- Lock a daily cash dashboard so decisions are made from live numbers
Documents to Prepare Before SBR Practitioner Appointment
Latest ATO integrated client account / debt summary
Aged creditor list and amounts owing
BAS and income tax lodgement status
Recent profit & loss, balance sheet, and cash flow
Employee entitlement position (wages, super, leave)
Major contracts, leases, and secured finance details
Cost Structure
How SBR Fees and Practitioner Payments Work
A practical breakdown of how fees are usually structured across the SBR lifecycle. For detailed fee data and ROI analysis, see our SBR cost guide.
2
Restructuring phase fee
Covers investigation, plan drafting, creditor communications, and statutory lodgements.
3
Plan administration fee
Applies if plan is approved and covers ongoing supervision/distributions.
4
Cash flow discipline
Directors need to maintain current obligations while the plan is being prepared.
What Not to Do
Common Mistakes During SBR — Pitfalls to Avoid
Seven mistakes that commonly compromise SBR outcomes. Each is easily avoided with practitioner-guided discipline — ignoring them can unwind an otherwise viable plan.
Incurring new ATO liabilities during the plan
New PAYG, SGC, or GST debts accrued after appointment are excluded debts — they cannot be compromised through the plan and must be paid in full. Ongoing compliance discipline is essential.
Paying related creditors ahead of unrelated creditors
Preferential payments to directors, shareholders, or associated entities can be reviewed by the practitioner. Unequal treatment undermines the plan and may trigger adverse actions against directors.
Selling fixed assets without RP agreement
Asset disposals during the restructuring phase should be discussed with the RP. Unusual asset sales can affect viability, creditor perception, and potentially constitute voidable transactions.
Amending records or destroying documents after appointment
Material alteration of financial records or disposal of books is a serious breach and may constitute an offence under the Corporations Act. Preserve records at appointment and provide full access to the RP.
Signing new personal guarantees to keep suppliers on-side
New personal guarantees during SBR transfer company risk to the director personally and may be voidable later. Suppliers asking for new guarantees should be redirected to the RP-led communication channel.
Missing plan payments after approval
Missed payments can terminate the plan. The RP and creditors can reconsider options — including a fallback to VA or liquidation. Plan viability depends on conservative cash flow assumptions, not optimistic projections.
Trying to negotiate with creditors directly during the plan
Once the plan is approved, all unsecured creditors are bound by its terms. Side deals or informal settlements undermine plan integrity. Route all creditor contact through the RP during the plan period.
Plan Execution Phase
How the SBR Plan Is Monitored and Administered — Over Up to 3 Years
Plan approval is just the start of a multi-year execution phase. Six things directors should understand about life under an active SBR plan:
Monthly/quarterly reporting to the RP
Most plans require the company to report revenue, expenses, and cash position on a defined cadence (often monthly for the first 6–12 months, quarterly after that). The RP uses reports to monitor plan viability.
Ongoing BAS, PAYG and super compliance
Post-appointment tax obligations continue on normal due dates. Failing to lodge BAS or pay super on time during the plan is the #1 cause of plan failure — ongoing compliance is a condition of continued trading.
Scheduled plan payments
Plan payments run to a schedule set at plan approval (typically monthly or quarterly instalments over 2–3 years). The RP distributes collected funds to creditors in accordance with the plan's priority rules.
Plan variation procedure
If circumstances change materially (revenue drop, major contract loss, unexpected cost), directors can propose a plan variation. Variations must be approved by creditors via the same 50%-by-value vote.
Plan termination triggers
The plan terminates automatically on payment default beyond cure periods, insolvency of the company, a director-initiated decision to appoint a liquidator, or court order. Termination triggers fallback options.
Final discharge and notice of completion
On completion of all payments, the RP issues a notice of plan completion. The company emerges with covered debts released, back to normal operation with the restructured debt position. ASIC records update.
When the Timeline Shifts
SBR Process Variations — When the Standard Timeline Doesn't Apply
The 20-business-day restructuring phase and 15-business-day vote are statutory timelines, but real-world matters sometimes don't run on rails. Scenarios where the process varies:
Holiday and statutory period extensions
The 20-business-day restructuring phase and 15-business-day vote window may be extended in limited circumstances — but this is not automatic. Plan around known holiday periods (Christmas, Easter) by starting early.
Creditors requesting further information
Creditors can request additional information during the vote period. The RP balances transparency against the statutory timeline. Complex plans with significant unsecured debt may face more questions.
Practitioner resignation mid-process
Rare, but possible if the RP identifies a conflict or fitness issue post-appointment. A replacement RP can be appointed, but any delay can affect plan viability. Choose a practitioner with capacity and clear conflict checks upfront.
Court orders (rare)
Courts can intervene in narrow circumstances — e.g. creditor disputes over voting eligibility, or alleged breaches of the Corporations Act. Court involvement is uncommon in typical SBR matters.
Parallel insolvency processes
SBR cannot run alongside Voluntary Administration or liquidation on the same company. Starting SBR requires the company is not already in another form of external administration.
Complexity Triggers
Common SBR Edge Cases: Disputed Debts, Personal Guarantees, and More
These do not automatically block SBR, but they usually require tighter preparation and evidence.
Edge Case
Disputed debts
Disputes can affect voting and timing; evidence quality becomes critical.
Edge Case
Personal guarantees
SBR addresses company debts, not all personal liability exposures.
Edge Case
Related entities
Intercompany balances and shared costs need clean separation.
Edge Case
Irregular lodgements
Rectification plans are often needed early to avoid eligibility failure.
SBR vs Voluntary Administration vs Liquidation: Decision Guide
A quick way to frame which pathway may fit before detailed legal/insolvency advice.
| Option | Usually Suitable When | Typical Result |
|---|---|---|
| SBR | Viable company, manageable operations, need formal debt compromise | Keep trading while compromising debt |
| VA | Complex stakeholder issues or uncertain business viability | Administrator takes control; broader restructure options |
| Liquidation | No viable turnaround and ongoing losses cannot be contained | Orderly wind-up and asset realization |
What Happens If the SBR Plan Is Rejected by Creditors?
If creditors don't approve the restructuring plan (which happens in about 14% of cases), the restructuring practitioner's appointment ends and the company returns to the directors' control.
At this point, directors need to consider alternative options, which may include:
- • Renegotiating directly with creditors
- • Voluntary administration
- • Liquidation
Common Concerns
Process Concerns Directors Raise Most — Addressed Directly
The procedural and practical objections directors raise most often before or during the SBR process. If any describe your hesitation, work through the answer with a restructuring practitioner.
How do I know the Restructuring Practitioner is independent?
RPs are registered liquidators regulated by ASIC under Chapter 5, Part 9 of the Corporations Act. They owe duties to creditors as a whole, not just to directors. At appointment, the RP must provide a declaration of independence disclosing any relationships. You can verify registration on the public ASIC Registered Liquidator Directory and review the declaration before the plan goes to creditors.
Can I change my mind after appointing the Restructuring Practitioner?
The appointment is a formal legal step and cannot simply be undone. However, if the plan is rejected by creditors (or not put to creditors), directors can pivot to VA, liquidation, or — with court leave in narrow cases — terminate the SBR process. Practically, most concerns surface during the pre-appointment conversation, which is why a thorough initial scoping call matters.
What if the Restructuring Practitioner finds problems I didn't know about?
RPs investigate financial records and flag issues as part of their statutory duty. If they identify material problems (potential voidable transactions, unrecorded liabilities, compliance failures), these must be disclosed to creditors in the plan proposal. Early, honest disclosure during the initial scoping call typically results in a better plan than attempting to conceal issues.
Do I have to attend a creditor meeting during SBR?
No. Unlike Voluntary Administration, SBR does not require a formal creditor meeting. Creditors vote in writing within the 15-business-day window. Directors may be asked to respond to creditor questions or provide additional information — typically handled by the RP or in individual follow-up calls, not in a meeting format.
What if my cash flow changes during the 3-year plan?
Plans include a defined payment schedule, but if circumstances change materially, directors can propose a plan variation. Variations require the same 50%-by-value creditor approval. If cash flow deteriorates to the point of payment default, the plan can terminate automatically — so ongoing monitoring against conservative assumptions matters more than optimistic targets.
Can I still negotiate directly with creditors during the plan?
Once the plan is approved, all unsecured creditors within the plan's scope are bound by its terms. Side deals or informal settlements undermine plan integrity and can trigger practitioner review. For ongoing commercial relationships (current-terms supply, future work), normal commercial conversations continue — but all plan-debt matters should be routed through the RP.
What if a major creditor doesn't respond to the vote at all?
Non-responding creditors are treated as not voting — their dollar value is not counted for or against the plan. This means the 50% approval threshold is calculated only on the dollar value of actual votes cast. The ATO generally votes in over 90% of cases; other major creditors typically respond. Non-response on a small-value creditor rarely changes the outcome.
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