Do I qualify for SBR in Australia?

Do I qualify for SBR in Australia?

Small Business Restructuring (SBR) is designed to help financially distressed companies recover, but not every business will qualify. There are specific criteria that must be meet before a business enter the process.

To be eligible for SBR, a business must meet the following:

• Total liabilities must be less than $1 million at the time the restructuring practitioner is appointed
• All tax lodgements are up to date with the ATO
• Employee entitlements are paid, including wages and superannuation
• The business is operated through a company structure, not a sole trader or partnership
• Directors can not have used another SBR or simplified liquidation in the past 7 years.

These requirements are set out under Australian Insolvency law and guidance from regulators such as the Australian Securities and Investments Commission (ASIC).

It’s not just about eligibility

Meeting the criteria allows you to enter SBR, but it does not guarantee a successful outcome. The business will still need to:

• Work with a restructuring practitioner
• Prepare a repayment plan for creditors
• Show that the business can continue operating while meeting those repayments.

If the plan is not considered viable, creditors may reject it. Creditors approval ultimately depends on whether the proposal is realistic and offers a better return than liquidation.

Common issues that affect eligibility

Some businesses struggle to qualify due to:

• Outstanding tax lodgements with the ATO
• Unpaid employee entitlements, especially Superannuation
• Total liabilities exceeding the $1 million threshold

In many cases, these issues can be addressed before starting the process, but timing is important. The ATO also plays an important role, as it is often one of the largest creditors and considers compliance history before supporting a restructuring plan.

What if you don’t qualify for SBR?

If your business does not meet the requirements for SBR, other options may need to be considered, such as a voluntary administration or liquidation. The right approach will depend on your financial position, the level of creditor pressure, and whether the business is viable or not.

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 qualifying for SBR in Australia, however, every company’s exact circumstances are different. We strongly encourage directors unsure whether their company meets the eligibility criteria for Small Business Restructuring (SBR) in Australia to give an insolvency professional like Dissolve to discuss your specific circumstances. Dissolve may even recommend cheaper (or free!) solutions than other insolvency firms.