Small Business Restructuring › SBR Process
Small Business Restructuring Process Lawyers — Directors Stay in Control. Debts Get Resolved.
The Small Business Restructuring (SBR) process under Part 5.3B of the Corporations Act 2001 allows eligible companies with liabilities under $1 million to restructure debts while directors remain in day-to-day control. A registered practitioner develops the plan, creditors vote, and the business continues operating throughout. It is the least disruptive formal restructuring option available to eligible Australian small businesses.
⚠ SBR eligibility requires total liabilities of $1 million or less and tax lodgements to be up to date. If ATO debt is accumulating or BAS returns are overdue, act before the eligibility window closes. Get urgent advice now.
SBR Process Matters We Handle
From eligibility assessment to plan approval — managing the SBR process.
Eligibility Assessment
Before committing to the SBR process, a lawyer assesses whether the company meets the eligibility criteria — total liabilities under $1 million (excluding employee entitlements), tax lodgements up to date, employee entitlements current, and no prior use of SBR or simplified liquidation in the past 7 years. Where eligibility is marginal, a lawyer identifies the steps needed to achieve eligibility.
Restructuring Practitioner Appointment
The SBR process formally commences when the directors appoint a registered small business restructuring practitioner. The appointment triggers the automatic moratorium — creditors cannot commence or continue legal proceedings, and secured creditors cannot enforce security. A lawyer advises on the appointment process and the practical effect of the moratorium on existing creditor demands and legal proceedings.
Restructuring Plan Development
The restructuring practitioner has 20 business days to develop a restructuring plan — working with the directors and the company's financial information to determine what the company can afford to pay creditors. A lawyer advises on the legal requirements for the plan, the content of the explanatory statement to creditors, and the strategy for achieving a majority creditor vote.
ATO Negotiation in SBR
The ATO is frequently the largest creditor in small business restructurings. A lawyer with experience in ATO debt negotiation engages with the ATO's Debt Hardship team and Restructuring team to support the restructuring plan — maximising the prospect that the ATO will vote in favour of the plan rather than reject it and apply to wind up the company.
Creditor Vote Management
Creditors have 15 business days to vote on the restructuring plan. The plan is accepted if a majority in value of creditors who vote accept it. A lawyer identifies the creditor classes, assesses the voting dynamics, and advises on how to maximise the prospect of a successful vote — including negotiating with key creditors before the vote.
Failed SBR & Alternative Pathways
Where the restructuring plan is rejected by creditors, or where the company is not eligible for SBR, a lawyer advises on alternative pathways — including voluntary administration, safe harbour, and informal creditor negotiations. A failed SBR does not automatically lead to liquidation — there are always options to assess before the company is wound up.
The Legal Framework
Part 5.3B Corporations Act 2001 — the SBR regime.
Eligibility — s453B Corporations Act 2001
Under s453B of the Corporations Act 2001, a company is eligible for SBR if: (1) total liabilities do not exceed $1 million (excluding employee entitlements, but including all other debts including ATO debts); (2) tax lodgements are up to date or arrangements have been made with the ATO; (3) employee entitlements that have fallen due are paid; and (4) the company has not used the SBR process or simplified liquidation within the preceding 7 years. A director who causes the company to enter SBR knowing it is not eligible commits an offence.
The moratorium — s451E Corporations Act 2001
On appointment of a restructuring practitioner, an automatic moratorium applies under s451E of the Corporations Act 2001. Secured creditors cannot enforce their security, owners of property cannot recover it, and lessors cannot terminate leases during the restructuring period. Unsecured creditors cannot commence or continue proceedings or enforce judgments. The moratorium provides the company with breathing room to develop the restructuring plan without the risk of creditors taking action that would frustrate the process.
Directors remain in control — s453C
Unlike voluntary administration — where the administrator takes control of the company — in SBR the directors retain management and control of the company's business and affairs throughout the process. The restructuring practitioner does not have management powers. This makes SBR significantly less disruptive to the business than voluntary administration, and significantly less concerning for customers, suppliers, and employees who may otherwise lose confidence in the company when they learn it is in external administration.
The restructuring plan — s453G
The restructuring plan under s453G must be developed within 20 business days of the practitioner's appointment. The plan sets out: the terms on which the company will compromise creditor debts (typically a percentage of the debt paid over a defined period); any assets to be sold; and the conditions that must be met for the plan to continue. The practitioner prepares an explanatory statement to accompany the plan — setting out the practitioner's opinion on the plan and comparing the return to creditors under the plan with the return they would receive in liquidation.
Creditor vote — majority in value
Creditors vote on the restructuring plan within 15 business days of receiving it. The plan is accepted if creditors holding a majority in value of the creditors who vote accept it — there is no headcount requirement (unlike in a DOCA creditor vote, which requires a majority in both number and value in some circumstances). This makes it easier to achieve a successful SBR vote than a successful DOCA vote where there are many small creditors. However, related-party creditors are excluded from voting — preventing the directors or their associates from influencing the outcome.
Effect of approved plan — binding on all unsecured creditors
An approved SBR plan is binding on all unsecured creditors of the company — including creditors who voted against the plan, creditors who did not vote, and creditors whose claims were not listed in the plan (subject to exceptions for creditors with unliquidated claims who were not given notice of the restructuring). This means a successful SBR plan definitively resolves the company's unsecured debt position — including ATO debt, trade creditor debt, and other unsecured claims — giving the company a clean slate on which to continue trading.
How It Works
One request. Free SBR eligibility assessment.
Tell us the company's total liabilities, the nature of the debts, whether BAS and tax returns are up to date, and whether any creditor action is underway. A restructuring lawyer will contact you urgently.
Submit Your RequestDescribe the company's situation
Tell us total liabilities (above or below $1 million), nature of debts (ATO, trade creditors, bank), BAS/tax lodgement status, employee entitlement position, and any urgent creditor action.
Matched to a restructuring lawyer
Your request is matched to a restructuring lawyer who can assess SBR eligibility, advise on the process, and identify the best restructuring pathway for your specific situation.
Free urgent consultation
A restructuring lawyer contacts you for a free consultation — assessing SBR eligibility, explaining the process, and advising on the strategy and timeline for achieving a successful restructuring.