Top 5 Benefits of Small Business Restructuring
Small Business Restructuring (SBR) is a formal process backed by the Australian Government and the Australian Taxation Office (ATO) to help eligible small businesses deal with unmanageable debts without shutting down. Introduced in 2021 under the Corporations Act 2001, this process allows directors to retain control of their business while working with a registered Small Business Restructuring Practitioner (SBRP).
Below are the top 5 benefits of using SBR to navigate financial hardship:
1. Legally Reduce ATO and Other Eligible Debts
One of the most significant benefits is the ability to negotiate a formal plan with creditors—including the ATO—that can reduce tax and supplier debts by up to 70% or more. This helps businesses avoid court actions, garnishee notices, and asset seizures.
2. Directors Stay in Control
Unlike Voluntary Administration, where control shifts to an external administrator, SBR allows directors to retain day-to-day control of the company throughout the process. This means you keep trading, retain your team, and maintain customer confidence.
3. Avoid Liquidation and Business Closure
By restructuring instead of winding up, a business can avoid the severe consequences of liquidation—such as asset sales, job losses, or director disqualification. SBR offers a path to recovery rather than an exit.
4. Fast, Simple, and Cost-Effective
SBR is a streamlined and low-cost process specifically designed for small businesses. Most plans are drafted and implemented within 20–35 business days, which is significantly faster than traditional insolvency procedures.
5. Protection from Legal Action
Once a company enters SBR, an automatic moratorium (pause) is placed on most unsecured creditor actions, giving the business space to breathe. This includes halting legal action, payment demands, and debt recovery enforcement—while the plan is being prepared and considered.
Bonus Benefit: ATO-Backed Support
The ATO is actively supporting small business restructuring plans, particularly when the proposal is realistic and the business can demonstrate ongoing viability. This makes it one of the most achievable pathways for businesses struggling with tax debt.
Final Thoughts
If your business is carrying over $100,000 in ATO or trade debt, or if you're receiving reminder letters or a Director Penalty Notice (DPN), SBR might be your best option. You’ll get to protect your company, reduce debt, and build a future—all within a government-endorsed framework.
Related Resources:
Treasury Fact Sheet: Insolvency Reforms for Small Business
Corporations Act 2001 (Schedule 1 - Restructuring Process)
