Sector: Medical Equipment Engineering
Process: Small Business Restructure (SBR)
The Background
This New South Wales-based firm had operated successfully for 14 years, generating $2.8 million in annual turnover and employing 15 specialised technicians. The business model was technically sound and commercially viable, providing critical maintenance for medical equipment nationwide.
The Crisis: Legacy Debt vs. Operational Health
Despite a strong foundation, COVID-19 travel restrictions and increased interstate operational costs severely hampered revenue. To preserve service capability, the director utilised high-interest private funding, which increased financial strain and led to a mounting tax debt.
Total ATO Debt:
$833,742
Trade Creditors:
$0 (All trade accounts were current)
The Threat:
A Director Penalty Notice (DPN) had been issued, threatening the director’s personal assets.
The Strategy: The SBR Reset
Our viability assessment confirmed the business remained fundamentally strong, with revenue trending back toward $3 million. The constraint was legacy tax debt, not operational weakness. We implemented a Small Business Restructure (SBR) to compromise the debt while continuing trade.
The Proposal to Creditors:
- Compromise: 30.85 cents in the dollar.
- Term: Paid over 31 months from trading surplus.
- Compliance: Full restoration of ATO reporting discipline.
The Outcome
The proposal received 100% creditor approval. This resulted in $576,531.93 of debt being compromised, halting all enforcement action and stabilising the director’s position.
- 15 Jobs Saved: All staff members were retained.
- Enterprise Value Preserved: The company avoided a liquidation that would have destroyed 14 years of market presence and OEM relationships.
- Growth Restored: Within 12 months, revenue exceeded $3 million and profitability improved significantly.
Key Takeaway
A DPN is not a death sentence. When the underlying business is sound, the SBR process provides a structured path to eliminate legacy debt and protect the future of the enterprise.
