For small businesses facing financial distress, the Small Business Restructuring Process (SBR) provides a structured and legally protected pathway to recovery. This process allows eligible businesses to address their debts while continuing to operate, offering a vital alternative to liquidation.
Why Accountants Play a Crucial Role in Small Business Restructuring
"Small business restructring is all about keeping the doors open — saving jobs, keeping customers happy, and protecting the value your clients have worked so hard to build.” - Thyge Trafford-Jones (SBRP)
As a trusted advisor, accountants and business advisors are often the first point of contact for business owners in distress. Your expertise in financial analysis, compliance, and strategic planning makes you an essential part of the restructuring process. Understanding how the Small Business Restructuring (SBR) Process works will allow you to guide clients through the options available and ensure they meet the necessary requirements.
Step-by-Step Guide to Small Business Restructuring
Step 1: Appointment of a Small Business Restructuring Practitioner (SBRP)
The process begins when company directors formally appoint a Small Business Restructuring Practitioner (SBRP). This licensed professional oversees the restructuring, ensures compliance, and helps the business develop a viable restructuring plan.
Step 2: Business Eligibility Assessment
To qualify for the SBR process, a business must meet the following key criteria:
Total liabilities must not exceed $1 million.
The company must be up to date with tax lodgements.
Employee entitlements such as superannuation and wages must be paid.
The business or its directors must not have engaged in a Small Business Restructure or Simplified Liquidation within the past seven years.
Accountants play a critical role in ensuring compliance with these requirements before proceeding with restructuring.
Step 3: Development of the Restructuring Plan
Once eligibility is confirmed, directors work with the SBRP to create a Restructuring Plan that outlines how the business will settle its outstanding debts. The key elements of the plan include:
A structured repayment proposal to creditors.
Evidence that the plan provides a better financial outcome than liquidation.
A realistic strategy to allow the business to continue operations while meeting obligations.
Step 4: Creditor Proposal Submission
The business has 20 business days to finalise and submit the restructuring plan to creditors. During this time, most enforcement actions against the company are paused, providing breathing space for directors to refine the proposal.
Step 5: Creditor Voting and Approval
Once submitted, creditors have 15 business days to review and vote on the plan. Approval requires more than 50% of creditors (by value of debt) to agree to the terms. If approved, the plan becomes legally binding.
Step 6: Implementation of the Restructuring Plan
With creditor approval, the business continues trading while making payments as per the agreed plan. The repayment period can last up to three years, providing a structured approach to financial recovery.
Step 7: Completion and Business Recovery
Upon successful completion of the restructuring plan, the business exits the process in a stronger financial position, free from unmanageable debts and able to focus on growth and sustainability.
How Accountants Can Support Clients Through Small Business Restructuring
Identifying Early Warning Signs: Educating clients on financial red flags can help them seek assistance before insolvency becomes unavoidable look out for:
Consistently overdue tax lodgements and superannuation payments.
Increasing creditor demands and overdue supplier accounts.
Poor cash flow and inability to meet payroll obligations.
Directors using personal funds to cover business expenses.
Advising on Restructuring vs. Liquidation:
Preparing Key Financial Data for SBRP Review: Before appointing an SBRP, accountants should help clients:
Communicating with Creditors
Ongoing Compliance and Monitoring
Even after a restructuring plan is in place, accountants should help businesses adhere to payment schedules and monitor financial health to avoid future distress.
Take Action: Help Your Clients Navigate Financial Distress
If you work with small business clients facing financial difficulty, now is the time to act. By guiding them through the Small Business Restructuring Process, you can help them avoid insolvency and achieve financial stability.
Download Our Free Small Business Restructuring EBook for Accountants
To help you support your clients effectively, we’ve created a comprehensive Small Business Restructuring Guide with:
Strategies to help your clients avoid liquidation and continue trading
How to reduce debt and protect your client's personal assets
Real-life case studies with proven results
A quick eligibility checklist for SBR
Click here to download our complete guide.
Partner with TTJ Advisory for Expert Small Business Restructuring Support
Navigating restructuring can be complex, but you don’t have to do it alone. TTJ Advisory specialises in assisting accountants and business advisors in managing financial distress cases for their clients.
Let’s work together to secure the best financial outcomes for small businesses in need.
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