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Small business restructuring (SBR) is a formal debt restructuring process designed to help financially distressed small businesses negotiate and settle their debts, while allowing them to continue trading.
It provides a more affordable and flexible alternative to traditional insolvency procedures like voluntary administration or liquidation.
ASIC commenced the process on 1 January 2021 and it was designed to help small businesses facing financial distress due to the pandemic by providing a simpler, more affordable restructuring mechanism compared to traditional insolvency processes.
Since its implementation, SBR has witnessed increased attention. There are 448 appointments in 2022–23, 1,425 in 2023–24, and there are expected to be around 3,000 in 2024–25.
The most popular industries to utilise SBR are construction (27 per cent) and accommodation and food services (23 per cent).
There were 3,388 SBR appointments between 1 July 2022 and 31 December 2024. Of the total, 2,820 transitioned to SBR plans, while 568 saw creditors reject plans and they were subsequently terminated.
Of the 1,161 companies that engaged an SBR plan by 31 March 2025, 93 per cent remained afloat as of 30 April 2025.
The median cost of restructuring between 1 July 2022 and 31 December 2024 was $21,998. Of the funds paid, 87 per cent went to the Australian Taxation Office, totalling around $88 million.
According to ASIC commissioner Kate O’Rourke, SBR allows leaders to restructure debt, while staying in control of the business.
“After a slow start, the recent growth of SBRs and other data in our report shows that the SBR regime is starting to deliver on the intended policy objective of reducing the complexity and costs involved in insolvency processes for small businesses and ultimately helping them to survive,” said O’Rourke.
“Safeguards against the misuse of the SBR process are important. In addition to the statutory safeguards, where we can, ASIC has tested questions raised by some stakeholders about the potential misuse of the SBR process. At this stage, we have not found evidence that indicates widespread misuse of the SBR process.
“We will continue to monitor the uptake of SBRs and their effectiveness. We are committed to ensuring that the SBR regime provides a cost-effective restructuring option that supports the survival of small business while minimising the risk of misuse.”
[Related: SMEs urged to diversify client base as insolvency fears surge]
