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Small Business
Restructuring service

Quick, inexpensive, and very successful!

Small Business Restructuring (SBR) was introduced in 2021 to assist small businesses in financial difficulty. SBR allows a small business to propose a Plan to its creditors to restructure its debts while the directors remain in control of the business.

  • Cheaper than a Voluntary Administration
  • Avoids liquidation
  • Better than a Payment Arrangement with the ATO

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     WHAT IS

    Small Business Restructuring and Why Is It So Popular?

    During the Coronavirus Pandemic the government correctly anticipated a spike in company insolvency and introduced new legislation to try to help. The aim was to save as many businesses as possible.

    Small Business Restructuring (SBR) was created to save viable businesses that were struggling from the one-off financial hit. SBR was initially not widely used because creditors were being very accommodating. Creditors, including the ATO, are now looking for payment. As a result, SBR has become very popular as it allows a company to renegotiate its debts with its creditors usually with a significant “haircut”.

     WHAT KINDS OF

    Debt Haircuts Can Be Achieved Through SBR?

    You’ll be surprised at the kinds of deals that creditors, including the ATO, are willing to accept through Small Business Restructuring. Recent SBR Plans achieved debt “haircuts” of between 65% to 91% of total debt. In dollar terms the “haircuts” have reduced total debts by $114,000 to $853,000. And the cost of an SBR to achieve those savings was between $5,500 and $33,000.

    real life example debt haircuts through sbr

     THE ATO AND THE

    Government WANT small businesses to restructure!

    Here is what the then Treasurer said when introducing Small Business Restructuring:

    “As the economy continues to recover, it will be critical that distressed businesses have the necessary flexibility to either restructure or to wind down their operations in an orderly manner.”

    AND

    “….these measures will reposition our insolvency system to reduce costs for small businesses, reduce the time they spend during the insolvency process, ensure greater economic dynamism, and ultimately help more small businesses get to the other side of the crisis.”

    Let’s see what the ATO says about Small Business Restructuring:

    “The ATO’s focus is on assisting eligible businesses to access Small Business Restructuring or Simplified Liquidation where possible and where appropriate. Where we have been a creditor we have supported most Restructuring Plans.”

    WHY IS

    SBR Better Than A Negotiation With The ATO?

    At present the ATO appears more willing to renegotiate the debt amount during a SBR than through other means (like the standard payment plan or other attempts at negotiation).

    Likely negotiated Outcomes Common SBR Outcomes
    Payment Terms An ATO Payment Arrangement will require payment in full, plus interest, within 2 years Payment terms can be up to 3 years, but are often much shorter due to the reduced debt amount – a one off payment is common
    Debt reduction (writeoff/haircut) The ATO will rarely agree to a negotiated debt reduction The ATO has approved SBRs with between 65% and 90% debt reduction

    WHY IS

    SBR Better Than A Voluntary Administration?

    Most people are familiar with the term Voluntary Administration (VA). SBR was developed to be a more suitable solution of VA for small business. So how are they different?

    Small Business Restructuring Voluntary Administration
    Fixed Cost?  
    Directors retain control?  
    Designed for small businesses?  
    Company returned to directors if deal fails?  
    Rough cost before Plan contribution $15,000 – $30,000 $60,000 – $150,000
    Duration? 20 – 30 bus. days 35  bus. days
    Level of investigation and reporting? Low High

    SOME EXAMPLES OF

    Recent SBR Plans Approved

    The aim of SBR is for a company to agree a Plan with its creditors. Here are some recent examples of Plans that have been approved using SBR.

    Type of company Total Company Debts Creditors agreed to reduce debts to Cents in the dollar for creditors Debt forgiven (haircut)
    Civil Contractor $902,500 $90,000 10 cents $812,500
    Café $960,500 $107,500 11 cents $853,000
    Construction $221,000 $35,000 16 cents $186,000

    WHY CHOOSE A

    Small Business Restructuring Practitioner (SBRP) from Dissolve

     

    icon trophy

    EXPERIENCE!!
    OUR SBRPs EACH HAVE
    OVER 33 YEARS INSOLVENCY EXPERIENCE

    icon restructuring

    DISSOLVE IS
    AN SME AS WELL!

    icon rating

    BUT WE’VE HAD OVER 1,000
    FORMAL INSOLVENCY APPOINTMENTS IN THE
    LAST 15 YEARS

    OUR

    Practitioners

     

    john gibbons

    John Gibbons

    LEAD PARTNER – DISSOLVE

    John has more than 30 years specialist experience in corporate recovery, restructuring and reorganisation. He was a Partner of one of the Big4 Accounting Firms.

    cliff sanderson

    Cliff Sanderson

    PARTNER – DISSOLVE

    Cliff is a corporate restructuring specialist with over 30 years of experience in Australia and internationally. He is the founder of Dissolve.

    cliff sanderson

    Jessie Wang

    SBR TEAM LEADER – DISSOLVE

    Jessie is Dissolve complex matter specialist. She has been involved with clients across various industries and has expertise in legal recovery and litigation.

    HOW MUCH

    Will a SBR Cost?

     

    cost of voluntary administration
    The good news is that Small Business Restructuring is much cheaper than the (old) alternative of Voluntary Administration. As a guide, fees can be in the range of $15,000-35,000. But in return you are likely to get a reduction in the debt of many times that amount. Also, you’ll be pleased to know that the law requires the practitioner to quote a fee upfront for the fixed cost for the Restructuring Phase and a percentage of the amount returned to creditors in the Plan Phase.

    The cost can be covered by the value of the company’s assets if they are being put to sale, or the company’s ongoing turnover if it continues to trade. We’ll be happy to make an estimate of our fees during your free consultation period.

    WHAT IS THE

    Small Business Restructuring process like?

     

    A Small Business restructuring is easy to initiate – we just need a Resolution by a majority of directors. We prepare all the documents so all you need to do is sign on the dotted line. We will lead the process and deal with the creditors.

    A Small Business Restructuring gives your company twenty business days to work with a Small Business Restructuring Practitioner (that’s us) to formulate a deal, and then up to fifteen business days for the creditors to vote on that deal. This period is called the Restructuring Phase.

    The SBRP then oversees the execution of the plan. This period is called the Plan Phase.

    voluntary administration process

    WHAT ARE THE

    Prerequisites for Entering The SBR Process?

     

    liquidation

    To be eligible for Small Business Restructuring, a company must be able to declare that:

    • The company is insolvent or about to become insolvent
    • The company’s total liabilities, i.e. creditors, do not exceed $1 million on the day it enters the process (exclusive of employee entitlements)
    • None of its directors has been a director of another company that has gone through another Small Business Restructuring or a Simplified Liquidation process within the last 7 years

    To be eligible to propose a plan (up to 20 business days into the process), the company must also be:

    • Up to date with all tax lodgements and
    • Able to pay all due and payable employee entitlements

    If the company is behind on either point it needs to get them up to date before proposing a Plan.

    Speak to an Small Business Restructuring Practitioner today.

    Simple steps with our Small Business Restructuring experts

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    Credentials

    Our professional memberships

    charted accountants

    Chartered Accountants

    Members in-house

    association independent

    Association of Independent
    Insolvency Practitioners

    AIIP Board Member in-house

    turnaround management

    Turnaround Management
    Association

    Members in-house

    australian restructuring insolvency

    Association of Independent
    Insolvency Practitioners

    ARITA Members in-house

    Contact Us

    Please either give us a call or submit the form and we will get back to you.

    1300 043 364