Can I keep running my business during restructuring?

Can I keep running my business during restructuring?

Yes. Under Small Business Restructuring, directors remain in control of the business. Allowing companies to continue trading while working through their financial difficulties is one of the key benefits of SBR.

How it works in practice

During SBR:

• The business continues operating as usual
• Directors retain control of day-to-day decisions
• A restructuring practitioner is appointed to oversee the process and assist with the plan
• A proposal is developed to repay creditors over time.
• “Restructuring Practitioner Appointed” must be appended to the company’s name on every public document and every negotiable instrument whilst the process is underway.

This “debtor-in-possession” approach means that, unlike some other insolvency processes, control is not handed over to an external party. ASIC confirms that directors remain responsible for the company while working with a practitioner to propose a plan to creditors.

What can you continue to do?

As it helps preserve the value of the business, directors can:

• Continue trading and generating revenue
• Maintain relationships with customers and suppliers
• Pay for ongoing business expenses

How this differs from other insolvency options

Small Business Restructuring is often preferred for smaller viable business because:

• In SBR, directors stay in control and the business continues operating
• In Voluntary Administration, an external administrator takes over
• In Liquidation, the business stops and control shifts to a liquidator.

What responsibilities do directors still have?

Directors still have responsibilities they must do during the process.

• Act in the best interest of creditors
• Work with the restructuring practitioner to prepare a viable plan
• Ensure the business can continue trading responsibly

Is it always possible to keep trading?

Not always. SBR is only suitable where the business remains viable. If the business cannot generate sufficient income or sustain operations, other option such as voluntary administration or liquidation may need to be considered.

Do you have more questions about our Small Business Restructuring? Read our full guide here

The Importance of Seeking Professional Advice

This article has aimed to provide general information about if you can keep running your business during restructuring, however, every company’s exact circumstances are different. We strongly encourage directors considering restructuring and wanting to understand whether they can continue trading while implementing a turnaround strategy to give an insolvency professional like Dissolve to discuss your specific circumstances. Dissolve may even recommend cheaper (or free!) solutions than other insolvency firms.