What it is
- Formal legal restructuring process
- Designed for eligible small companies in distress
- Directors usually remain in control
- Requires practitioner oversight and creditor vote
Government-backed small business insolvency pathway
What is Small Business Restructuring?
SBR is a formal process that helps eligible companies compromise debt while directors keep control. For viable businesses under pressure, it can provide a path to keep trading rather than close down.
3,388+
Appointments (July 2022 - December 2024)
87%
Approval rate
93%
Still trading post-SBR
$1,000,000
Current liability cap
Source: ASIC Report 810: Review of small business restructuring process 2022-24, June 2025. See the full data in our SBR statistics dashboard.
Quick Clarity
What Small Business Restructuring Is and Is Not
What it is not
- Not a guaranteed debt write-off
- Not available to every business structure
- Not a substitute for ongoing tax compliance
- Not risk-free if cash flow cannot support the plan
Legislative Context
When Was SBR Introduced? Legislative History of Part 5.3B
Small Business Restructuring was introduced as part of Australia's COVID-era insolvency reforms — a new, lower-cost alternative to Voluntary Administration for eligible small companies.
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2020
Corporations Amendment (Corporate Insolvency Reforms) Act 2020
Passed by the Australian Parliament in December 2020 as part of the Federal Government's response to COVID-era small business insolvency pressure. Inserted Part 5.3B (SBR) and Part 5.5 (Simplified Liquidation) into the Corporations Act 2001.
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1 Jan 2021
SBR becomes available
The new Small Business Restructuring process commenced alongside Simplified Liquidation. Intended as a lower-cost, director-controlled alternative to Voluntary Administration (Part 5.3A) for eligible small companies with debts under $1 million.
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2021–2024
Adoption ramp and ASIC oversight
SBR appointments grew from hundreds to thousands per year as practitioners and advisors built capacity. ASIC Report 810 (June 2025) reviewed 3,388 appointments from July 2022 to December 2024 — construction at 27%, hospitality at 22%, 87% plan approval rate.
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2025+
Ongoing regulatory monitoring
ASIC continues to monitor SBR conduct, practitioner registration standards, and integrity of the match-back to the public register. The ATO supports SBR plans in over 90% of cases where it is a creditor, reinforcing SBR as the primary small business restructuring pathway in Australia.
Why Businesses Choose SBR
Benefits of Small Business Restructuring
Why viable businesses use SBR instead of waiting until options narrow.
Debt Reduction
Most viable plans target meaningful debt compromise while keeping the operating entity alive.
Directors Stay in Control
You usually retain management control instead of handing operations to an external administrator.
Continue Trading
Revenue operations can keep running while the plan is prepared and voted on.
Enforcement Pause
Appointment can pause active creditor enforcement and create immediate breathing room.
DPN Window Support
In time-critical DPN scenarios, SBR can be part of a fast protective response strategy.
Employee Priority
Employee entitlements are priority obligations and should be treated accordingly in the plan.
How Small Business Restructuring Works: Step-by-Step Process
Core timeline from first appointment to final plan completion.
Structured Timeline
Most of SBR is a structured execution process
The strongest outcomes usually come from fast preparation, disciplined communication with creditors, and a realistic payment plan.
Fast preparation
Complete financial records and plan documentation quickly to maximize timeline efficiency.
Disciplined creditor communication
Maintain consistent messaging to build confidence and prevent narrative drift.
Realistic payment plan
Develop achievable payment terms that creditors can support and the business can deliver.
Day 0-1 Step 1
Assessment and Appointment
- Initial eligibility check and practitioner engagement
- Directors resolve to appoint a restructuring practitioner
- ASIC notice lodged and process formally starts
Days 1-20 Step 2
Restructuring Phase
- Business continues trading under director control
- Financial position is reviewed and plan is drafted
- Plan must generally provide creditors a better outcome than liquidation
Days 21-35 Step 3
Creditor Voting
- Plan and report are issued to creditors
- Creditors vote over 15 business days
- Approval is by value of debts voting
Up to 3 years Step 4
Plan Performance
- Company makes agreed payments under the plan
- Practitioner supervises distributions and compliance
- When complete, covered debts are released according to the plan terms
After the Plan
What Happens After the SBR Plan Completes?
A completed restructuring plan returns the company to normal operation with the restructured debt position. Six things directors should understand about life after SBR:
Debt release
Covered debts are released according to the plan's terms. Excluded debts (employee entitlements, secured creditors to the extent of security, post-appointment debts) remain payable in full.
Director status
SBR on its own does not trigger ASIC director disqualification. Directors remain in control of the company through and after the plan. Personal guarantees and DPN exposure are separate and may still apply.
7-year cooling-off
Directors who used SBR cannot use Part 5.3B again (as director of any company) for 7 years from the prior appointment. This is a statutory eligibility rule — plan carefully before appointment.
Credit rebuild
The appointment is recorded on the public ASIC register and typically appears on commercial credit bureau files. A completed plan with the company still trading is materially different from liquidation — many companies rebuild credit standing within 12–24 months.
Ongoing compliance
Ongoing BAS lodgement, PAYG remittance, and superannuation payments continue as normal business obligations. Plan payments are made on the schedule set by the plan. Non-compliance with plan terms can trigger plan termination.
Final discharge
On full plan performance, the practitioner issues a notice of plan completion. The company returns to normal operation with the restructured debt position. ASIC records update to reflect plan completion.
Who Runs the Process
Who Is a Restructuring Practitioner?
A Restructuring Practitioner (RP) is a registered liquidator with ASIC who is additionally eligible to accept appointments as an SBR practitioner under Part 5.3B of the Corporations Act 2001. RPs must meet continuing professional obligations, maintain professional indemnity insurance, and comply with ASIC's oversight of Part 5.3B appointments.
What the RP does during SBR
- 1.Investigates financial records and confirms eligibility for Part 5.3B.
- 2.Assists directors in preparing the restructuring plan within 20 business days.
- 3.Provides a declaration to creditors on solvency and plan viability.
- 4.Administers the 15-business-day creditor vote.
- 5.Supervises plan payments and compliance over up to 3 years.
- 6.Issues the notice of plan completion when obligations are met.
How to choose a Restructuring Practitioner
- Verify ASIC registration — check the registered liquidator is current on the ASIC Registered Liquidator Directory and eligible for SBR appointments.
- Industry and state fit — practitioners with construction, hospitality, trades or healthcare experience understand sector-specific creditor dynamics.
- Fixed-fee scoping — most RPs quote a fixed fee for the restructuring phase after an initial eligibility and complexity review.
- Responsiveness — Part 5.3B has tight statutory deadlines (20+15 business days). A practitioner who responds within hours, not days, matters.
Small Business Restructuring Costs and Practitioner Fees
What most owners want to know early: cost range, structure, and what changes the quote.
Median restructuring phase fee
$16,137
ASIC Report 810 (2022-24 sample)
Median plan phase fee
$6,739
Plan administration period
Typical total range
$15k-$30k
Varies by complexity and creditor mix
Main factors that affect cost
Number and complexity of creditors
Quality and speed of financial records provided
Disputed debts and legal issues
Cash flow complexity and plan design
For a full breakdown of practitioner fees, payment structures, and ROI analysis, see our detailed SBR cost guide.
Risks and Limitations of Small Business Restructuring
- Not every company qualifies, especially if lodgements are not up to date.
- Plans can fail creditor voting; rejection still leaves directors with urgent decisions.
- Cash flow discipline is critical. Missing plan payments can put the company back at risk.
- SBR is a legal insolvency process and should be managed with licensed practitioner advice.
Should Your Business Consider SBR? Decision Checklist
Use this quick checklist before committing:
- Is the core business still commercially viable after debt relief?
- Can you keep up with ongoing tax lodgements and current obligations?
- Do you have reliable cash flow forecasts for plan payments?
- Are directors prepared to provide complete financial records quickly?
- Have you compared SBR with VA, liquidation, and informal workout options?
SBR vs Liquidation vs Voluntary Administration: Comparison
| Feature | SBR | Voluntary Admin | Liquidation |
|---|---|---|---|
| Directors in control | Yes | No | No |
| Business continues trading | Yes | Uncertain | No |
| Typical cost | $15-30k | $50k+ | $20k+ |
| Timeframe | 5-6 weeks to vote | 2-3 months+ | 6-12 months |
| Debt compromise potential | Often high | Varies | N/A |
SBR Eligibility Requirements in Australia
You must satisfy all legal criteria. This is a practical summary, not legal advice.
Pty Ltd company
SBR is for eligible proprietary companies, not sole traders personally.
Liabilities under threshold
Current cap shown in this guide: $1,000,000.
Lodgements current
Tax lodgements generally need to be up to date or rectified quickly.
Not already in other administration
Cannot already be in liquidation or another disqualifying process.
7-year director rule
Directors cannot have used SBR in the prior 7 years.
Sources and References
Key references used across this page:
- ASIC Report 810 - Review of the small business restructuring process
- ATO - Small business restructuring overview
- Corporations Act 2001 (Cth)
Regulatory settings can change. Confirm current eligibility and thresholds before acting.
Common Concerns
Directors' Concerns About SBR — Addressed Directly
The objections and reservations directors raise most often before entering Small Business Restructuring. If any describe your hesitation, work through the answer with a restructuring practitioner before deciding.
Will SBR destroy my company's credit rating?
SBR is lodged on the public ASIC register, so it will be visible on company searches. Commercial credit bureaus (Equifax, illion, CreditorWatch) typically record the appointment. However, a completed SBR with debt compromised and the company still trading is materially different from liquidation on a credit file. Many companies rebuild credit within 12–24 months of plan completion. Personal credit is separate and is not directly affected unless director guarantees exist.
Will my clients, suppliers, or staff see the ASIC notice?
Yes — the appointment is lodged on the public ASIC register and is visible to anyone who performs a company search. However, SBR does not publish the appointment in newspapers (unlike older insolvency processes) and there is no requirement to notify individual clients. Most clients never search ASIC unless prompted. Suppliers who monitor creditor risk typically learn quickly, and most prefer a paying, restructuring supplier/customer to a write-off. Employees are generally advised by the directors themselves to preserve continuity.
Can directors be held personally liable after SBR?
SBR addresses the company's debts, not the directors' personal liability. Directors remain personally liable for: (1) debts where they have signed a personal guarantee, (2) Director Penalty Notice (DPN) amounts that were not remitted before appointment, (3) trust account shortfalls or fraud. SBR does not automatically discharge any personal liability. A non-lockdown DPN can be remitted by appointing a Restructuring Practitioner within the 21-day response window — lockdown DPNs cannot.
What happens to loans from directors or related parties?
Related-party loans (director loans, shareholder loans, associated-entity debt) are part of the plan but related creditors have restricted voting rights — their votes generally do not count toward the approval threshold. Related creditors recover alongside other unsecured creditors on the plan's terms. Directors cannot use their own related-creditor loans to control the plan outcome.
Can the same company use SBR twice?
Yes — the company itself has no limit, but the directors are subject to a 7-year cooling-off rule. No person who was a director of a Part 5.3B restructuring company can use SBR again (as a director of any other company) for 7 years from the prior appointment date. This is a Part 5.3B eligibility test — check it carefully before appointment.
Will my bank close my business account during SBR?
Banks are typically informed of the appointment (directly or via ASIC monitoring) and review the account relationship. Most banks continue existing transaction accounts through SBR, though they may restrict overdrafts and seek guarantees for new facilities. Proactive communication with your bank before appointment is generally safer than waiting for them to react to the ASIC notice.
Do I need a lawyer as well as a Restructuring Practitioner?
Not mandatory, but often sensible. The Restructuring Practitioner runs the SBR process and prepares the plan, but cannot provide legal advice on director duties, contract termination clauses, personal guarantees, or disputed debts. For straightforward SBR engagements, a tax agent and the RP may be sufficient. For complex situations (related-party disputes, major contract termination risk, regulator exposure), legal advice alongside the RP protects director interests.
Key Terms
Small Business Restructuring Glossary — Part 5.3B Terminology
The terms most frequently encountered during SBR — drawn from the Corporations Act 2001, ASIC guidance, and practitioner usage. Concise definitions for directors, advisors, and creditors:
- Part 5.3B of the Corporations Act 2001
- The part of the Corporations Act 2001 (Cth) that establishes the Small Business Restructuring process. Introduced by the Corporations Amendment (Corporate Insolvency Reforms) Act 2020, effective 1 January 2021. Part 5.3B enables eligible Pty Ltd companies with total liabilities under $1 million to restructure debts through a practitioner-led plan while directors retain control.
- Restructuring Practitioner (RP)
- A registered liquidator with ASIC who is eligible to accept appointments as a Restructuring Practitioner under Part 5.3B. The RP assists the company in preparing the restructuring plan, provides a declaration to creditors, administers the creditor vote, and supervises plan performance. Not all registered liquidators are eligible to act as RPs — additional ASIC criteria apply.
- Restructuring Plan
- The formal proposal to compromise company debts, prepared by the company with practitioner oversight during the 20-business-day restructuring phase. The plan must include a declaration about solvency prospects and must generally offer creditors a better outcome than liquidation. Plans run for up to 3 years.
- Moratorium / Automatic Stay
- The statutory protection that pauses creditor enforcement action from the time the practitioner is appointed through the restructuring phase. Existing demands and winding-up proceedings are generally stayed; new enforcement without court leave is restricted. Provides the breathing room in which the plan is developed.
- Admissible Claim
- A debt owed by the company as at the appointment date that is eligible to be dealt with under the restructuring plan. Generally includes unsecured debts, but excluded debts and post-appointment obligations are treated separately. Employee entitlements, secured debts, and debts incurred after appointment sit outside the reducible debt pile.
- Excluded Debts
- Categories of debt that cannot be compromised by an SBR plan. Includes employee entitlements (wages, super, leave), secured creditor claims to the extent of their security, and debts incurred after the appointment. Must be paid in full or dealt with outside the plan.
- Related Creditor
- A creditor who is related to the company or directors under the Corporations Act (e.g. director loans, shareholder loans, related-entity trading debt). Related creditors have restricted voting rights on the plan — their votes generally do not count towards the statutory approval threshold to protect genuine arm's-length creditors.
- Registrable Restructuring Appointment
- The formal appointment of a Restructuring Practitioner lodged on the ASIC register. Creates public notice of the appointment and is the trigger for the moratorium, creditor notification, and plan preparation. Appointment is visible on public ASIC searches — relevant for SBR Guide's ASIC match-back verification.
Related Small Business Restructuring Guides
How SBR Works
Step-by-step process timeline and what to expect at each phase.
Eligibility Criteria
Check whether your business qualifies for the SBR process.
SBR Costs & Fees
Practitioner fees, payment structures, and ROI analysis.
SBR Statistics
Latest data on appointments, approval rates, and outcomes.
SBR vs DOCA
How SBR compares to a Deed of Company Arrangement.
SBR Glossary
Key terms and definitions used in the restructuring process.
Act before options narrow
Check Your Small Business Restructuring Eligibility
If you are facing ATO pressure or creditor enforcement, timing matters. Validate eligibility quickly and move with a licensed practitioner if suitable.
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