Small Business Restructuring (SBR): Eligibility, the Process, Costs and What It Means for Directors

Reviewed by Alex Hanley, Chartered Accountant — H&H Tax and Business Advisors
Last reviewed: 13 July 2026

Small business restructuring (SBR) is a formal debt restructuring process under Part 5.3B of the Corporations Act 2001 (Cth), available to insolvent companies with total liabilities of $1 million or less. Unlike voluntary administration, the directors stay in control of the company — a debtor-in-possession model — while an ASIC-registered small business restructuring practitioner helps them propose a plan to compromise unsecured debts. Creditors then decide: roughly 20 business days to propose the plan, then a 15-business-day vote — about seven weeks end to end.

If your company is behind with the Australian Taxation Office (ATO), juggling suppliers, and you are lying awake wondering whether the business you built can survive its debts, SBR was designed for exactly this situation. It is the only formal insolvency process in Australia that lets you keep running the company while its unsecured debts are put to creditors for compromise. If you have been researching a ‘small business restructure’ for your company, SBR is the formal version of that idea — and eligibility is the first thing to test. This guide covers eligibility (honestly — the criteria rule plenty of companies out), the process stage by stage, what it typically costs, how it interacts with Director Penalty Notices, and the situations where SBR is the wrong tool.

Need to talk it through now? Call 0468 061 936 for a confidential, no-obligation conversation, or send an enquiry and we’ll call you back.

Is your company what SBR was designed for?

SBR eligibility generally requires total liabilities under $1 million. That single line rules more companies in — and out — than anything else on this page. If the company’s total debts (ATO debt, trade creditors, loans, credit cards, related-party loans) sit under the cap, SBR is usually the first option worth testing, because it is the only formal process where you keep the keys.

The companies SBR fits tend to share a profile:

• The ATO is the biggest creditor — accumulated BAS, PAYG withholding and superannuation from the hard quarters. If that’s you, start with the wider picture in our ATO debt guide.
• The business itself still works. There are customers, orders and capable staff — but too much of each week’s takings goes to servicing old debt instead of running the business.
• Pressure is escalating — firmer ATO letters, a Director Penalty Notice, a garnishee on the bank account, or suppliers moving you to cash-on-delivery.
• You want to keep trading and keep your people employed, because closing a genuinely viable business feels — and often is — the wrong answer.

You are not the first director here, and you are not an outlier. ASIC’s review of the scheme counted 3,388 SBR appointments between 1 July 2022 and 31 December 2024, with construction (27%) and accommodation and food services (23%) the most common industries — and ASIC reported that, at that stage of its review, it had not found evidence indicating widespread misuse of the process (ASIC media release 25-111MR, reporting REP 810). Part 5.3B is a relatively new part of the law — the regime commenced on 1 January 2021 [VERIFY: confirm commencement date of the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 reforms against legislation.gov.au] — but it has quickly become the main formal rescue path for small Australian companies.

One thing this page will not do is oversell it. SBR is a tool for a viable business carrying unviable debt. If the business loses money before debt payments even start, a restructuring plan only delays a harder decision. The sections below on creditor rejection and the wrong-tool scenarios matter as much as the eligibility list.

SBR eligibility: the six criteria

Eligibility is set by section 453C of the Corporations Act and regulation 5.3B.03 of the Corporations Regulations 2001, summarised in ASIC’s small business restructuring guidance. In plain terms, six things must be true:

1. It must be a company. SBR is only available to companies registered under the Corporations Act — including a company acting as trustee of a trading trust, though trust structures add complexity that needs early advice. Sole traders and partnerships cannot use SBR; personal insolvency options sit under the Bankruptcy Act 1966 instead.
2. The company is insolvent or likely to become insolvent. The directors must resolve that, in their opinion, the company is insolvent or is likely to become insolvent at some future time, and that a restructuring practitioner should be appointed (Part 5.3B, Corporations Act; ASIC guidance).
3. Total liabilities do not exceed $1 million on the day the restructuring begins — the eligibility threshold that rules most companies in or out. The test in regulation 5.3B.03 counts the company’s liabilities for admissible debts and claims — broadly, the debts that would be provable if the company were wound up. [VERIFY: the precise counting rules under regs 5.3B.01 and 5.3B.03 — including how secured debts, contingent claims and unpaid employee entitlements are treated for the $1 million cap — need solicitor confirmation before publication.]
4. The company has not been through SBR or simplified liquidation in the past 7 years. The 7-year exclusion period is prescribed by the regulations (reg 5.3B.03; ASIC guidance).
5. No director has used the process elsewhere in the past 7 years. No current director — or person who was a director within the 12 months before the appointment — may have been a director of another company that went through restructuring or simplified liquidation within the previous 7 years, with a limited exception where the other company is a related body corporate. [VERIFY: s 453C(1)(c) and reg 5.3B.03 — confirm the 12-month former-director element and the exact scope of the related-body-corporate exception.]
6. Before the plan can go to creditors: employee entitlements paid, tax lodgements made. All employee entitlements that are due and payable — which includes superannuation — must be paid, and the company must have given the returns, notices and statements required by taxation laws: in practice, lodgements up to date (ASIC guidance; employee entitlements are defined to include superannuation contributions — s 596AA, Corporations Act). The ATO has indicated that where these obligations are not completely met, the company must demonstrate it is substantially compliant (ATO — small business restructuring). [VERIFY: reg 5.3B.24 pinpoint for the plan-proposal conditions, and the ATO’s current substantial-compliance wording — the ATO’s SBR page blocks automated access and must be checked by a human.]

A timing point that matters: criteria 1 to 5 are tested on the day the practitioner is appointed. Criterion 6 only has to be satisfied before the plan is proposed to creditors — which means the 20-business-day proposal period can be used to catch up outstanding super and lodgements. But every dollar of catch-up has to be funded from somewhere, so walk in knowing the size of that bill. And be aware that old unlodged BAS carries a separate personal sting: it can trigger lockdown director penalties that no restructuring will remove.

Not sure whether you clear the $1 million cap, or whether unlodged returns rule you out for now? That is a short phone conversation, not a mystery. Call 0468 061 936 — confidential, no obligation — or send an enquiry and we’ll call you back.

The small business restructuring practitioner’s role

Only a registered liquidator can consent to be appointed, and act, as a small business restructuring practitioner (ASIC guidance). Under Part 5.3B and the regulations, the practitioner’s job is to:

• advise the company about the restructuring;
• assist the directors to prepare the restructuring plan and the restructuring proposal statement that goes to creditors;
• make formal declarations — that the company meets the eligibility criteria, whether it is likely to be able to meet its obligations under the plan, and whether the information given to creditors is complete, identifying any related creditors;
• manage the vote — distribute the plan documents, resolve disputes about the schedule of debts and claims, and tally the creditor statements;
• administer the plan if creditors accept it — receiving the plan payments and distributing them to creditors.

What the practitioner does not do is run your business. Day-to-day control stays with the directors throughout — that is the point of the model.

An important note about who does what: Restructure Partners is not a restructuring practitioner and does not administer SBR appointments. We are an Australian restructuring and insolvency advisory. Our role is the stage before the appointment: testing eligibility honestly, mapping your personal exposure, getting the lodgement and entitlement groundwork moving, and connecting you with ASIC-registered practitioners who can take the appointment if SBR is the right path.

How the SBR process works: five stages

Here is the process from the director’s chair, based on ASIC’s guidance and Part 5.3B:

1. Stage 1 — advice, groundwork and appointment. Before anything formal happens, the position gets tested: is the company insolvent or heading there, do the liabilities clear the $1 million cap, what would it cost to bring super and lodgements current, and what is your personal exposure (guarantees, DPNs)? If SBR stacks up, the board resolves to appoint a restructuring practitioner, the practitioner consents in writing, the fixed fee for the restructuring phase is agreed, and the appointment is made in writing. ASIC is notified, and the restructuring formally begins. The company’s public documents must state that a restructuring practitioner has been appointed. [VERIFY: confirm the public-document notification requirement and its Corporations Act section.]
2. Stage 2 — protections start, and the business trades on. From day one, unsecured creditors generally cannot begin, continue or enforce their claims against the company without the practitioner’s consent or the court’s permission; a creditor cannot enforce a personal guarantee against a director, or a director’s spouse or relative, except with the court’s leave; and a court may adjourn a winding-up application if it is in the company’s interests for the restructuring to continue (ASIC guidance). You keep trading in the ordinary course of business without needing anyone’s approval; transactions outside the ordinary course — paying out an old debt, selling the business or a major asset, paying a dividend — need the practitioner’s consent (ASIC guidance). Directors also have protection from insolvent trading liability for debts incurred in the ordinary course of business during the restructuring. [VERIFY: pinpoint the insolvent-trading relief — ss 588GAAB and 588GAAC as inserted by the 2020 reforms — and confirm its exact scope.] For many contracts, “ipso facto” termination clauses triggered by the restructuring are also stayed. [VERIFY: confirm the ipso facto stay applies to Part 5.3B restructuring and cite the section.]
3. Stage 3 — prepare and propose the plan (20 business days). The company, with the practitioner’s help, has 20 business days from the day the restructuring begins to prepare and propose its restructuring plan — extendable once by the practitioner by no more than 10 business days, or further by court order (ASIC guidance). Before the plan can be proposed, employee entitlements that are due and payable (including super) must be paid and tax lodgements brought up to date. The plan package sent to creditors includes the plan itself, a restructuring proposal statement, the schedule of debts and claims, and the practitioner’s declaration. The plan offers creditors a fund — a lump sum, or instalments from future trading — in full and final compromise of the admissible debts, with all admissible creditors treated on equal terms and paid proportionately. [VERIFY: confirm the equal-treatment/proportionate-payment requirement and its regulation pinpoint, and confirm typical plan durations (commonly up to about three years) and whether any maximum term applies.]
4. Stage 4 — creditors vote (15 business days). Creditors have 15 business days from the day the practitioner gives them the documents to vote by returning a statement accepting or rejecting the plan — there is no creditors’ meeting (ASIC guidance). Disputes about the schedule of debts can extend the period. The plan is accepted if a majority in value of the affected creditors who respond vote yes; related creditors cannot vote (see the next section).
5. Stage 5 — the outcome. If creditors accept, the plan becomes binding on the company, its officers and members, and creditors with admissible claims, the company’s ASIC status returns from external administration to registered, and the practitioner administers the plan — collecting the payments and distributing them (ASIC guidance). When the plan is completed, the company is released from the balance of the debts it covered. [VERIFY: confirm the release-on-completion mechanics under the regulations.] If creditors reject the plan, the restructuring ends — what that means is covered in the sections below.

Who decides: the creditor vote

The vote is where every restructuring plan lives or dies, so it pays to understand it precisely:

• Majority in value, of those who vote. The plan passes if creditors representing more than half the total value of admissible debts among those who return statements accept it (ASIC guidance). There is no headcount test and no meeting.
• Related creditors are excluded. A creditor who was a related creditor of the company when the restructuring began — think director loans and family entities — cannot vote (ASIC guidance). The decision rests with arm’s-length creditors.
• In practice, the ATO’s vote is usually the vote. Because tax debt dominates most small-company balance sheets, the ATO is very often the majority creditor. ASIC’s review found that of just over $101 million distributed to creditors from completed plans, roughly $88 million — about 87% — went to the ATO (ASIC 25-111MR).
• The ATO has published how it approaches the vote. It has said it generally supports a restructuring plan for an eligible company where the plan would give creditors a better return within a reasonable period than a winding up, and there are no public-interest concerns that make support inappropriate (ATO — small business restructuring). [VERIFY: the ATO SBR page blocks automated access — confirm its current wording by human check.] A history of poor compliance, unexplained related-party dealings, or a plan that barely beats liquidation all work against acceptance.

How often do plans get through? In ASIC’s 2022–24 review period, about 83% of the 3,388 restructuring appointments proceeded to a restructuring plan, and most of the appointments that ended early did so because creditors rejected the proposal (ASIC 25-111MR). Treat that as context, not a promise — past acceptance rates say nothing about any individual plan, and creditors decide each one on its own numbers.

What small business restructuring costs

Honest numbers, because you deserve them. There are two components:

• The practitioner’s fees. The fee for the restructuring phase (advice, plan preparation, the vote) is a fixed amount agreed with the directors before the appointment; if the plan is accepted, the practitioner’s remuneration for administering it is usually a percentage of the payments made under the plan. [VERIFY: confirm the remuneration structure and its regulation pinpoint.] Practitioner fees for an SBR typically fall in the range of $10,000 to $30,000 — ASIC’s 2022–24 review found median practitioner remuneration of $21,998 (ASIC 25-111MR).
• The plan fund itself, plus the catch-up costs. The plan payments to creditors come from the company — future trading profits, a director or family contribution, or an asset sale. On top of that, any unpaid super and the cost of bringing lodgements current must be funded before the plan can be proposed.

By comparison, administrator fees in a small business voluntary administration typically run $30,000 to $80,000 — the cost gap is one of the main reasons SBR eligibility is usually the first thing to check. Treat every figure on this page as a typical range, not a quote: your numbers depend on your facts, and a reputable practitioner will give you a written fee estimate before any appointment. Ask for one.

Want a realistic read on what SBR would cost — and what a workable plan would have to look like — for your company? Call 0468 061 936 — confidential, no obligation — or send an enquiry.

SBR vs voluntary administration vs liquidation

Sources: Corporations Act 2001, Pts 5.3A and 5.3B; ASIC — Small business restructuring and the restructuring plan; ATO — Director penalty notices.

As a rough decision framework:

• SBR tends to fit when debts are under $1 million, the underlying business is viable but over-indebted, the directors want to stay in control, and tax lodgements and employee entitlements are in order (or can quickly be put in order).
• Voluntary administration tends to fit when total debts exceed $1 million, when viability is genuinely uncertain and needs an independent assessment creditors will trust, or when a secured creditor holding security over the whole business needs to be brought to the table.
• Liquidation tends to fit when the business is not viable in any form and the responsible course is an orderly, lawful close.

SBR and Director Penalty Notices

For many directors, the DPN is what forces the decision — so here is exactly how the two interact, and the timing rules are unforgiving:

• Non-lockdown DPN: appointing a small business restructuring practitioner within the 21 days from the date on the notice remits the director penalty — see how the 21 days is counted. The same is true of appointing a voluntary administrator or beginning winding up within the window.
• Lockdown DPN: issued where activity statements were lodged more than 3 months after the due date (or not at all), or where the SGC statement was not lodged by its due date. A lockdown DPN is not remitted by any appointment: only paying the debt, or a statutory defence, removes that personal liability. See our lockdown DPN guide.

Source: ATO — Director penalty notices.

Two practical points. First, if a DPN has arrived, the 21-day clock — not the 20-business-day proposal period — drives the urgency: the appointment has to happen inside the window, and assessing eligibility, agreeing fees and passing the board resolution all take days you cannot get back. Second, even where a penalty is locked down, amounts the company actually pays toward the underlying PAYG withholding, GST or super debt — including through a restructuring plan — reduce the parallel director penalty by the same amount, because the company’s debt and your penalty run in parallel [VERIFY: parallel reduction of director penalties by company payments — including dividends paid under a restructuring plan — against Div 269 Sch 1 TAA 1953 and the ATO’s current DPN wording; solicitor item.] (ATO).

If a DPN has already arrived, the appointment has to happen inside the 21 days — and eligibility checks, fee agreement and the board resolution all take days. Call 0468 061 936 now — confidential, no obligation — or send an enquiry and we’ll call you back.

Personal guarantees, secured creditors and what SBR does not fix

Personal guarantees. During the restructuring, a creditor generally cannot enforce a personal guarantee against a director — or a director’s spouse or relative — without the court’s permission (ASIC guidance). But the guarantee itself is not cancelled, and this is the part directors most often misunderstand: the restructuring plan compromises the company’s debts, not your personal promise to pay them. Once the process ends, a guaranteed creditor can pursue you personally for any shortfall unless the guarantee has been dealt with along the way. Bring every guarantee you have signed to your first advice meeting — they are regularly buried in supplier credit applications.

Secured creditors. A secured creditor is bound by the plan only for any unsecured shortfall — the amount by which the debt exceeds the value of its security — and the plan cannot stop a secured creditor dealing with its security unless that creditor voted to accept the plan and the plan expressly provides for it (ASIC guidance). If your real problem is equipment finance or a secured lender, SBR may not move that needle.

And SBR does not fix: lockdown director penalties, your personal tax debts, or money you owe the company — director loan accounts remain assets of the company, and both the practitioner and the creditors reading the proposal statement will scrutinise them.

If the plan fails — and when SBR is the wrong tool

An honest guide has to cover the downside scenarios, because they shape whether SBR is worth attempting at all.

If creditors vote no

The restructuring simply ends. The company does not automatically go into liquidation — control continues with the directors — but the protections fall away, creditors can resume enforcement, and every problem that existed before the appointment is still there, now with the practitioner’s fixed fee spent. A further SBR is then generally unavailable for seven years, because the company has been through a restructuring. [VERIFY: confirm that a restructuring that ends with a rejected plan still counts as having “undergone restructuring” for the 7-year eligibility exclusion.]

At that point the realistic paths are voluntary administration, a creditors’ voluntary liquidation, or direct negotiation with creditors. A rejected plan is not the end of the road — but it burns time and money, which is exactly why the plan has to be realistic, and honestly better for creditors than a liquidation, the first time.

If the plan is accepted but later fails

An accepted plan can still terminate: if the company breaches it and the contravention is not rectified within 30 business days; if a condition the plan depends on does not occur within 10 business days of acceptance; if a court orders termination; or if the company goes into administration or liquidation (ASIC guidance). If the plan terminates, creditors are generally free to pursue the unpaid balance of their debts. [VERIFY: confirm the effect of plan termination on compromised debts — whether claims revive less amounts already received — against the regulations.] The lesson: never propose plan payments the trading numbers cannot genuinely support.

When SBR is not the right tool

• The business is not viable. If the company loses money before old debt is even counted, a plan funded from future trading is a promise it cannot keep. Liquidation — hard as it is — may be the responsible answer.
• Total liabilities are over $1 million. SBR is simply unavailable; voluntary administration and a deed of company arrangement do the equivalent job for larger companies.
• The catch-up bill is unfundable. If years of unpaid super and unlodged returns cannot realistically be paid and lodged inside the proposal window, the plan can never lawfully be put.
• The problem creditor is secured. SBR compromises unsecured debts; it cannot stop a secured lender or equipment financier dealing with its security unless that creditor agrees.
• Creditor trust is gone. Where creditors suspect the directors — related-party dealings, a messy compliance history — an independent, practitioner-controlled process like VA may be the only proposal they will accept.

What SBR looks like in practice: four illustrative examples

The examples below are illustrative composites only — they are not actual clients, and they do not predict or guarantee any outcome. Every restructuring depends on its own facts and on how creditors vote.

The café group with an ATO problem. A hospitality company with $520,000 in total liabilities — most of it BAS and PAYG withholding built up across two hard winters — was trading profitably again but could never catch up the arrears. Lodgements were brought current during the proposal period, and the company proposed a plan paying creditors monthly instalments from trading over two years. The ATO, as majority creditor, compared the plan against a liquidation of a business with few hard assets, and voted to accept. The company kept trading and kept its staff.

The subcontractor racing a DPN. A construction subcontractor’s director received a non-lockdown Director Penalty Notice for unreported PAYG withholding. With liabilities of about $700,000, the company was SBR-eligible — and because a restructuring practitioner was appointed on day 14 of the 21-day window, the director penalty was remitted. The plan itself was voted on weeks later; the DPN clock, not the plan timetable, drove the appointment date.

The company that was too big. A wholesaler with $1.6 million in liabilities wanted SBR for the debtor-in-possession model, but the $1 million cap ruled it out on day one. It went into voluntary administration instead and put a deed of company arrangement to creditors — the same compromise idea, through the process built for its size.

The plan that creditors rejected. A courier company proposed a plan that offered creditors only marginally more than a liquidation would, on top of a long history of ignored ATO payment arrangements. Creditors voted it down. The company went into a creditors’ voluntary liquidation — and the director’s honest reflection was that the money spent on the attempt would have been better spent on advice a year earlier.

Common mistakes directors make with SBR

1. Waiting until the lodgements are years behind. Unlodged returns quietly convert remittable director penalties into lockdown DPNs — and they turn the plan-proposal conditions into a mountain. Lodging on time, even when you cannot pay, keeps SBR (and your personal position) workable.
2. Paying favourite creditors on the way in. Clearing a mate’s invoice or a personally guaranteed debt just before the appointment is outside the ordinary course, damages your credibility with the practitioner and creditors, and can be challenged. Stop and get advice first.
3. Forgetting the super catch-up is real money. Employee entitlements that are due and payable — including super — must actually be paid before the plan can go to creditors. Budget for it from the start.
4. Treating the plan as an opening bid. There is no negotiation round: creditors vote the proposal up or down, and a failed restructuring generally cannot be repeated for seven years. The first proposal has to be the best realistic one.
5. Assuming SBR wipes personal exposure. It does not touch personal guarantees, lockdown penalties or your own tax debts. Map the personal position before choosing the company’s path — sometimes the option that is best for the company is not the one that is best for you, and you need to see both before deciding.
6. Listening to anyone who suggests moving the assets instead. Transferring the equipment, the client list or the business name to a fresh company so the “new entity” trades on while the old one carries the debts is illegal phoenix activity — creditor-defeating conduct with serious civil and criminal penalties for directors and the advisers who facilitate it (ASIC — illegal phoenix activity). SBR exists precisely so a viable business can be saved lawfully, in daylight, with creditors voting on the deal. If an adviser proposes the other route, walk away.

Next steps: test eligibility early, while every option is open

Everything that makes SBR attractive — staying in control, the enforcement pause, the compromise of unsecured debts — depends on acting while the company still qualifies and while the plan can still be funded. Liabilities drift past $1 million, unlodged returns lock down penalties, and DPN windows close. Testing eligibility early does not commit you to anything; it means the decision gets made with the most options still on the table.

Restructure Partners is an Australian specialist restructuring and insolvency advisory. We work with directors nationwide to assess small business restructuring honestly alongside voluntary administration, liquidation and informal turnaround options like ATO payment plans — and where SBR is the right path, we connect you with ASIC-registered practitioners who can take the appointment. Only registered liquidators can act as restructuring practitioners; what we bring is a clear-eyed assessment of whether this door is the right one before you walk through it.

• Call 0468 061 936 — confidential, no obligation, and we’ll tell you straight if SBR isn’t the right fit.
• Or send an enquiry — confidential, and we’ll call you back.

Frequently asked questions

What is small business restructuring (SBR)?

Small business restructuring is a formal insolvency process under Part 5.3B of the Corporations Act 2001 that lets an eligible company — broadly, one with total liabilities of $1 million or less — propose a plan to compromise its unsecured debts while the directors stay in control and the business keeps trading. An ASIC-registered small business restructuring practitioner helps prepare the plan and certifies it, and creditors vote on whether to accept it.

Who is eligible for small business restructuring?

A company is eligible for SBR if it is insolvent or likely to become insolvent, its total liabilities do not exceed $1 million on the day restructuring begins, and neither the company nor its directors have used SBR or simplified liquidation within the previous seven years. Before the plan can go to creditors, employee entitlements that are due and payable (including superannuation) must be paid and tax lodgements must be up to date.

What is the threshold for small business restructuring in Australia?

The threshold for small business restructuring is total liabilities of $1 million or less, tested on the day the restructuring begins — set by regulation 5.3B.03 of the Corporations Regulations 2001. The test counts the company’s liabilities for admissible debts and claims, broadly the debts that would be provable if the company were wound up. A company over the $1 million threshold cannot use SBR; voluntary administration does the equivalent job for larger companies.

What is a small business restructuring practitioner?

A small business restructuring practitioner is the ASIC-registered practitioner who administers a small business restructuring under Part 5.3B of the Corporations Act 2001 — only a registered liquidator can consent, in writing, to act in the role. The practitioner advises the company about the restructuring, assists the directors to prepare the plan, makes the formal declarations that go to creditors, manages the creditor vote, and administers the plan if creditors accept it. Day-to-day control of the business stays with the directors throughout.

Do directors stay in control of the company during SBR?

Yes — this is the defining feature of small business restructuring. Directors keep running the company and can trade in the ordinary course of business without the practitioner’s approval. Transactions outside the ordinary course — such as selling the business or paying out an old debt — need the restructuring practitioner’s consent. In voluntary administration, by contrast, directors’ powers are suspended entirely.

How long does small business restructuring take?

The core process runs about seven weeks: up to 20 business days to prepare and propose the restructuring plan (the practitioner can extend this once by up to 10 business days), then 15 business days for creditors to vote. If creditors accept, the plan itself is then paid out over an agreed period — commonly anywhere from a lump sum within weeks to instalments over a few years.

How much does small business restructuring cost?

Practitioner fees for SBR typically fall in the range of $10,000 to $30,000 — ASIC’s review of restructurings from 2022 to 2024 found median practitioner remuneration of about $22,000. The fee for the restructuring phase is a fixed amount agreed before the appointment, and plan administration is usually charged as a percentage of payments made under the plan. Treat any figure as a typical range, not a quote, and ask for a written estimate up front.

How much debt can a restructuring plan write off?

There is no fixed minimum or maximum — the plan offers creditors what the company can realistically afford, and creditors holding a majority in value of those who vote decide whether to accept it. Creditors generally compare the plan’s return against what a liquidation would pay them. No adviser can promise a particular reduction; the outcome always depends on the creditor vote.

Does small business restructuring stop a director penalty notice?

It depends on the type of DPN. For a non-lockdown DPN, appointing a small business restructuring practitioner within the 21 days from the date on the notice remits the director penalty. A lockdown DPN — issued where activity statements were lodged more than 3 months after the due date (or not at all), or where the SGC statement was not lodged by its due date — is not remitted by any appointment: only paying the debt, or a statutory defence, removes that personal liability.

What happens to personal guarantees during SBR?

During the restructuring, a creditor generally cannot enforce a personal guarantee against a director (or a director’s spouse or relative) without the court’s permission. The guarantee itself is not cancelled, and a restructuring plan compromises the company’s debts, not the director’s personal promise — once the process ends, a guaranteed creditor can pursue the director for any shortfall unless the guarantee has been dealt with.

What happens if creditors reject the restructuring plan?

The restructuring ends. The company does not automatically go into liquidation — control simply continues with the directors, but the protections fall away and creditors can resume enforcement action. At that point the realistic options are usually voluntary administration, a creditors’ voluntary liquidation, or negotiating with creditors directly, and a further SBR is generally unavailable for seven years.

Can the ATO vote against a restructuring plan?

Yes. The ATO votes like any other unsecured creditor, and because it is often the largest creditor, its vote frequently decides the outcome. The ATO has said it generally supports a restructuring plan where the plan returns more to creditors than a winding up would and there are no public-interest concerns — but its support is never automatic, and a poor compliance history counts against a company.

Will small business restructuring affect me personally as a director?

SBR is designed to be the least intrusive formal process. You stay in control of the company, debts incurred in the ordinary course of business during the restructuring have protection from insolvent trading liability, and a completed plan releases the company from the debts it covered. But SBR does not erase personal guarantees, lockdown director penalties or your personal tax debts — mapping that personal exposure before appointing a practitioner is essential.

Can a company use small business restructuring more than once?

Not within seven years. A company is ineligible if it has already been through restructuring or simplified liquidation in the previous seven years, and it is also ineligible if a director (including some former directors) has used those processes in another company within that period, subject to limited exceptions for related companies.

Sources: Corporations Act 2001 (Cth), Part 5.3B (legislation.gov.au) · Corporations Regulations 2001 (Cth), Part 5.3B (legislation.gov.au) · ASIC — Small business restructuring and the restructuring plan · ASIC — 25-111MR, reporting REP 810: Review of small business restructuring process 2022–24 · ATO — Small business restructuring · ATO — Director penalty notices · ASIC — Illegal phoenix activity

This page is general information only, not legal or financial advice, and Restructure Partners is not affiliated with the ATO or ASIC. Whether small business restructuring, voluntary administration or liquidation fits your company depends on its specific circumstances — eligibility, timelines, costs and outcomes all vary, and no outcome is guaranteed. Please seek advice from a qualified professional about your own position before acting.