Small Business Restructuring & Insolvency — All States & Territories
Small Business Restructuring Lawyers — Keep the Business. Resolve the Debt.
A viable small business buried under debt has options — the Small Business Restructuring process (Part 5.3B), voluntary administration, safe harbour, and informal debt compromise all allow businesses to restructure without immediate liquidation. Directors who act early have significantly more options and significantly less personal exposure. Get connected with a restructuring lawyer for a free urgent consultation today.
⚠ Directors can face personal liability for insolvent trading from the date the company became insolvent — not from the date legal action commences. ATO statutory demands require a response within 21 days. Director penalty notices have a 21-day window. Early advice maximises options. Get urgent advice today.
Small Business Restructuring Practice Areas
Every restructuring and insolvency option — explained for small business directors.
Select the situation that matches your business. Each page explains the legal process, director obligations, personal liability risks, and the options available to preserve the business or manage its wind-down.
Small Business Restructuring (SBR) Process
The formal Part 5.3B process under the Corporations Act 2001 allows eligible companies with liabilities under $1 million to restructure debts while directors retain control. A restructuring practitioner develops a plan, creditors vote, and the business continues operating throughout — making it the least disruptive formal option for eligible companies.
Get SBR process help →Voluntary Administration
Voluntary administration under Part 5.3A of the Corporations Act 2001 provides an automatic moratorium on creditor action while an independent administrator assesses whether the company can be saved (via a DOCA) or should be wound up. It is the primary formal restructuring option for companies that do not qualify for SBR.
Get voluntary administration help →Deed of Company Arrangement (DOCA)
A DOCA is the outcome of a successful voluntary administration — it is a binding agreement between the company and its creditors that allows the company to compromise its debts and continue trading. A lawyer advises on DOCA terms, creditor negotiations, and the legal effect of a DOCA on different classes of creditors.
Get DOCA help →Safe Harbour for Directors
The safe harbour provisions (s588GA Corporations Act 2001) protect directors from insolvent trading liability while they are developing and implementing a course of action that is reasonably likely to lead to a better outcome for the company than immediate liquidation. Safe harbour enables informal restructuring without the cost and disruption of formal insolvency.
Get safe harbour help →Insolvent Trading & Director Liability
Directors who allow a company to incur debts when it is insolvent (or becomes insolvent by incurring those debts) face personal liability under s588G of the Corporations Act 2001. A lawyer advises on the insolvent trading regime, defends liquidator claims against directors, and identifies defences — including the business judgement rule and safe harbour.
Get insolvent trading help →Simplified Liquidation
Simplified liquidation (Part 5.6 Corporations Act 2001 — introduced for small companies in 2021) provides a faster, lower-cost wind-up process for small companies with liabilities under $1 million. It reduces the liquidator's reporting obligations and the cost of the liquidation — making it more viable for small companies with limited assets to wind up in an orderly way.
Get simplified liquidation help →Trading Trust Insolvency
Many small businesses operate through a trustee company and discretionary or unit trust structure. When such a business becomes insolvent, the insolvency of the trustee company and the trust assets interact in complex ways — including the trustee's right of indemnity, the trust assets' availability to creditors, and the impact on beneficiaries. A lawyer advises on trading trust insolvency issues.
Get trading trust help →Why Early Advice Matters
Directors who act early have more options — and less personal exposure.
The single most important factor in small business restructuring is timing. The earlier a director seeks advice when financial difficulties emerge, the more restructuring options are available and the lower the risk of personal liability.
Insolvent trading — personal liability accrues from the date of insolvency
Directors who allow a company to incur debts when it is insolvent face personal liability under s588G of the Corporations Act 2001 for the debts incurred from the date of insolvency — not from the date legal proceedings are commenced. A liquidator appointed years later can investigate the company's trading history and bring personal liability claims against directors for debts incurred while the company was insolvent. The only way to eliminate this risk is to stop the company incurring new debts once insolvency is identified — by placing the company into administration, implementing safe harbour, or achieving a restructuring.
The SBR eligibility window — act before it closes
Small Business Restructuring under Part 5.3B of the Corporations Act 2001 is only available to companies with total liabilities of $1 million or less (excluding employee entitlements), whose tax lodgements are up to date, and which have not used the SBR or simplified liquidation process in the preceding 7 years. If ATO debt accumulates to the point where the $1 million threshold is exceeded, or if BAS lodgements fall behind, the company loses SBR eligibility — and must use the more expensive and disruptive voluntary administration process instead. Early advice ensures the company can access the most appropriate process before eligibility is lost.
Safe harbour — informal restructuring with legal protection
The safe harbour provisions (s588GA Corporations Act 2001, introduced in 2017) allow directors to take a "course of action" that is reasonably likely to lead to a better outcome for the company than immediate administration or liquidation — without incurring personal liability for debts incurred during the restructuring. Safe harbour requires the company to be seeking appropriate advice, maintaining proper books and records, and paying employee entitlements. It provides a window for informal restructuring — for example, negotiating with the ATO, finding a buyer for the business, or raising equity — without the cost and disruption of formal insolvency. A lawyer establishes and documents the safe harbour process to ensure the statutory protections apply.
Director penalty notices — the ATO's personal liability mechanism
The ATO's director penalty notice (DPN) regime makes directors personally liable for unpaid PAYG withholding, superannuation guarantee charge, and GST. For companies with lodgement compliance (BAS lodged within 3 months of due date), directors have 21 days from receiving a DPN to avoid personal liability by placing the company into administration or appointing a liquidator. For companies with poor lodgement compliance, the DPN is a "lockdown" DPN — personal liability cannot be avoided regardless of what the director does. A restructuring lawyer advises on whether SBR, voluntary administration, or another process is the most appropriate response to a DPN and manages the 21-day window.
ATO debt — the most common trigger for small business insolvency
ATO debt — including overdue GST, PAYG withholding, income tax, and superannuation guarantee charge — is the most common trigger for small business financial difficulty. The ATO has broad collection powers (garnishee notices, statutory demands, DPNs, and wind-up applications) and is a priority creditor in liquidation. However, the ATO also has the ability to accept SBR plans and DOCAs that pay less than the full debt over time — making it a key creditor in any restructuring. A lawyer with experience in ATO debt negotiation and formal restructuring maximises the prospect of an ATO-supported restructuring plan.
Trading trusts — the hidden complexity
Many small businesses operate through a trustee company and a discretionary or unit trust. When such a business becomes insolvent, the trustee company's insolvency does not automatically mean the trust assets are available to the company's creditors — the trustee's right of indemnity against trust assets and the trust deed's provisions determine what happens to the assets. The interaction between the corporate insolvency regime and trust law creates complex issues that require specialist advice — a restructuring lawyer who understands both corporate insolvency and trust law advises on the options available to the trustee, the directors, and the beneficiaries.
How It Works
One request. A free restructuring consultation.
Tell us the company's total liabilities, the nature of the debts (ATO, trade creditors, bank), whether any demands or DPNs have been received, and whether the business is still trading. A restructuring lawyer will contact you urgently.
Submit Your RequestDescribe the situation
Tell us total liabilities (above or below $1 million), the nature of the debts, whether BAS and tax lodgements are up to date, any ATO demands or DPNs received, and whether the business is still trading.
Matched to a restructuring lawyer
Your request is matched to a lawyer experienced in small business restructuring — who can advise on SBR eligibility, safe harbour, voluntary administration, and all available options for your specific situation.
Free urgent consultation
A restructuring lawyer contacts you for a free consultation — assessing eligibility for SBR and other processes, identifying personal liability risks, and providing a clear strategy for protecting the business and the directors.
About Small Business Restructuring Law in Australia
Part 5.3B of the Corporations Act 2001 — the SBR framework.
Small Business Restructuring (SBR) was introduced into the Corporations Act 2001 on 1 January 2021 as Part 5.3B — a new, streamlined restructuring process designed specifically for small businesses. It allows eligible companies to restructure their debts while directors remain in day-to-day control — significantly less disruptive than voluntary administration, which requires an independent administrator to take control of the company.
To be eligible for SBR, a company must: have total liabilities of $1 million or less (excluding employee entitlements); have tax lodgements up to date (or have made arrangements with the ATO); have paid all employee entitlements that are due; not have used the SBR or simplified liquidation process in the preceding 7 years; and have a registered small business restructuring practitioner appointed. The practitioner does not take control of the company — the directors continue to manage day-to-day operations — but the practitioner develops the restructuring plan and manages the creditor vote.
Once a restructuring practitioner is appointed, an automatic moratorium applies — secured creditors cannot enforce security, and most unsecured creditors cannot commence or continue legal proceedings against the company. This gives the company breathing room to develop and present a restructuring plan to creditors. The plan can propose to pay creditors a percentage of their debt over time — or can propose other terms. Creditors vote on the plan, and if a majority in value of creditors who vote accept it, the plan binds all unsecured creditors (including those who voted against it).
Voluntary administration under Part 5.3A of the Corporations Act 2001 remains the primary restructuring option for companies that do not qualify for SBR — because their liabilities exceed $1 million, their tax lodgements are not up to date, or for other eligibility reasons. Voluntary administration involves an independent administrator taking control of the company, investigating its affairs, and convening two meetings of creditors. The second meeting votes on the company's future — whether to enter a DOCA, return to the directors' control, or proceed to liquidation.
The safe harbour provisions (s588GA Corporations Act 2001) were introduced in 2017 to encourage directors to engage earlier with financial difficulties — without the immediate risk of insolvent trading liability. Safe harbour protects a director from insolvent trading liability while they are developing and implementing a course of action that is "reasonably likely to lead to a better outcome" for the company than immediate administration or liquidation. The protection is not automatic — the director must be able to demonstrate they were genuinely pursuing a restructuring and taking appropriate advice throughout the safe harbour period.
Simplified liquidation (also introduced on 1 January 2021) provides a faster, lower-cost wind-up process for eligible small companies. It is available where the company has liabilities of $1 million or less, the liquidator has reasonable grounds to believe there are no voidable transactions or misconduct, and the directors make a declaration confirming certain matters. Simplified liquidation reduces the liquidator's reporting and investigation obligations — making it more cost-effective for small companies with limited assets to achieve an orderly wind-up.