The SBR process involves an initial assessment, eligibility review, appointment of a restructuring practitioner, a 20-business-day proposal period, and a 15-business-day creditor voting period. Directors remain in control throughout. If the plan is approved, the business continues according to the proposal; if rejected, alternative options may be considered.
Download our free SBR Documents Checklist to understand what information you’ll likely need and where to find it before speaking with a restructuring practitioner.
On This Page
- Introduction
- SBR Overview
- Small Business Restructuring Process
- Common Delays
- What Should Directors Do During the Process?
- Final Take
- FAQs
Introduction
Small Business Restructuring (SBR) is designed to help eligible companies deal with financial distress while continuing to trade.
However, many directors are unfamiliar with what actually happens once the process begins. Questions often arise about timing, creditor involvement, the role of the restructuring practitioner and what happens if creditors reject the proposal.
Understanding the process is important because SBR follows a structured timeline with specific steps, deadlines and voting requirements. Directors who understand how the process works are often better placed to prepare their business and assess whether SBR is the right option.
This guide explains the Small Business Restructuring process step by step, including the key timeframes, documents and decisions involved.
SBR Overview
While every restructuring is different, the process generally follows the same pathway:
- Initial advice and assessment.
- Eligibility review.
- Director resolution.
- Appointment of the restructuring practitioner.
- Proposal period (20 business days).
- Restructuring plan and proposal statement issued.
- Creditor voting period (15 business days).
- Plan accepted or rejected.
- Plan implementation.
The process is designed to move relatively quickly compared to other formal insolvency procedures, while still giving creditors enough information to make an informed decision about the company’s proposal.
If you’re considering Small Business Restructuring, preparation matters.
Small Business Restructuring Process
Step 1: Initial Advice and Assessment
The process usually begins when directors recognise that the company is experiencing financial pressure and needs a formal restructuring solution.
Common warning signs may include:
- Growing ATO debt,
- Increasing creditor pressure,
- Persistent cash flow problems,
- Overdue supplier accounts,
- Difficulty meeting upcoming obligations, or
- Concerns about insolvency.
At this stage, directors seek advice regarding the company’s financial position and the restructuring options available.
The purpose of the assessment is to determine:
- Whether the business remains viable,
- Whether SBR may be suitable,
- Whether the company is likely to meet the eligibility requirements, and
- Whether alternative restructuring or insolvency options should be considered.
Seeking advice early is often beneficial because more options are generally available before creditor pressure becomes severe.
Step 2: Eligibility Review
Before a company can proceed with Small Business Restructuring, its eligibility must be assessed.
Not every company qualifies for SBR, and eligibility issues identified early can prevent delays later in the process.
The review will typically consider:
- Whether the company is insolvent or likely to become insolvent,
- Whether total liabilities fall within the applicable threshold,
- Whether employee entitlements that are due and payable have been paid,
- Whether required tax lodgements have been completed, and
- Whether any restrictions relating to prior SBR or simplified liquidation processes apply.
This stage is important because creditors can only be presented with a restructuring plan if the company satisfies the eligibility requirements.
Missing information can delay your eligibility review.
Step 3: Director Resolution
Once the directors determine that Small Business Restructuring may be appropriate, the company must formally resolve to enter the process.
This usually involves the directors deciding that:
- The company is insolvent or likely to become insolvent, and
- A Small Business Restructuring Practitioner should be appointed.
This is an important step because it marks the company’s transition from assessing options to actively pursuing a formal restructuring pathway.
At this stage, directors should ensure they understand the company’s financial position and are prepared to work closely with the restructuring practitioner throughout the process.
Step 4: Appointment of the Small Business Restructuring Practitioner
Following the director resolution, a Small Business Restructuring Practitioner is formally appointed.
Unlike voluntary administration, the practitioner does not take control of the company.
Instead, the practitioner’s role is to:
- Assess eligibility,
- Review the company’s financial position,
- Assist with preparing the restructuring plan,
- Certify the proposal before it is provided to creditors, and
- Oversee the process.
One of the key features of SBR is that directors generally remain in control of the business throughout this period.
The company can usually continue:
- Trading,
- Managing employees,
- Dealing with customers and suppliers, and
- Making day-to-day operational decisions.
The practitioner provides oversight and guidance, but responsibility for running the business remains with the directors.
Step 5: The 20-Business-Day Proposal Period
After the practitioner is appointed, the company enters the restructuring proposal period.
This period generally lasts 20 business days and is one of the most important stages of the entire process.
During this time, the directors and practitioner work together to:
- Review the company’s financial position,
- Identify creditor claims,
- Assess available assets and cash flow,
- Gather supporting financial information,
- Develop a restructuring proposal, and
- Prepare the documents that will ultimately be provided to creditors.
The company usually continues trading throughout this period.
Directors should focus on:
- Maintaining business operations,
- Preserving customer and supplier relationships,
- Providing accurate financial information, and
- Demonstrating that the business remains viable.
The objective is to develop a realistic restructuring plan that creditors may be willing to support.
A proposal that is poorly prepared, lacks supporting information or appears commercially unrealistic is unlikely to receive creditor approval.
Step 6: Restructuring Plan and Proposal Statement
At the end of the proposal period, the restructuring practitioner prepares and distributes the restructuring plan and proposal statement to creditors.
The restructuring plan outlines:
- How much creditors will receive,
- How payments will be funded,
- When payments will be made, and
- The proposed return to creditors.
The proposal statement provides creditors with information about the company and the basis on which the restructuring proposal has been prepared.
Together, these documents allow creditors to assess:
- The company’s financial position,
- The viability of the proposal, and
- Whether the plan offers a better outcome than liquidation.
The clearer and more realistic the proposal, the more likely it is to receive creditor support.
Step 7: Creditor Voting Period
Once the restructuring plan has been distributed, creditors generally have 15 business days to consider the proposal and cast their vote.
During this period, creditors review the information provided and decide whether the plan represents a better outcome than alternative options such as liquidation.
Creditors typically consider:
- The amount being offered,
- The likelihood of payment,
- The company’s future prospects, and
- The return they may receive under other insolvency processes.
The restructuring plan is accepted if the required majority of creditor value votes in favour of it.
Because creditor support ultimately determines whether the restructuring proceeds, this stage is often one of the most important parts of the entire process.
Plan Accepted
If creditors approve the restructuring plan, it becomes binding on participating creditors.
The company then continues operating while complying with the terms of the approved arrangement.
Depending on the proposal, this may involve:
- Lump-sum payments,
- Instalment payments,
- Contributions from future trading profits,
- Asset realisations, or
- Other agreed funding mechanisms.
Directors remain in control of the business throughout the implementation period.
Plan Rejected
A rejected restructuring plan does not automatically result in liquidation.
However, the proposed arrangement cannot proceed and directors will need to consider alternative options.
Depending on the circumstances, these may include:
- Informal creditor negotiations,
- ATO payment arrangements,
- Safe Harbour,
- Voluntary administration, or
- Liquidation.
Importantly, rejection does not necessarily mean the business is no longer viable. It simply means creditors were not prepared to accept the proposed restructuring arrangement.
The appropriate next step will depend on the company’s financial position, creditor pressure and future prospects.
Further reading:
Common Delays
While the SBR framework is designed to move quickly, delays can still occur.
Some of the most common causes include:
- Outstanding tax lodgements,
- Incomplete financial records,
- Unpaid employee entitlements,
- Difficulty identifying creditor claims,
- Missing supporting documentation, or
- Delays obtaining financial information.
Many SBR delays are caused by missing records, incomplete financial information or outstanding tax documentation.
What Should Directors Do During the Process?
Directors continue playing a central role throughout Small Business Restructuring.
A practical checklist includes:
- Continue operating the business where possible.
- Work closely with the restructuring practitioner.
- Maintain accurate financial records.
- Provide requested information promptly.
- Preserve relationships with customers and suppliers.
- Focus on cash flow and business viability.
- Support employees and maintain business continuity.
- Comply with the requirements of the restructuring process.
The stronger the underlying business, the greater the likelihood of presenting a proposal that creditors are willing to support.
Final Take
SBR follows a structured process designed to help eligible companies deal with financial distress while continuing to trade. Each stage serves a specific purpose. Directors remain in control of the business throughout the process, while the restructuring practitioner helps prepare and oversee the proposal presented to creditors.
For many viable businesses facing creditor pressure, ATO debt or cash flow difficulties, Small Business Restructuring can provide a formal pathway to restructure debt and move forward with certainty.
At Halo Advisory, we work for you — the director. Financial expert Greg Bartels offers a no-obligation, consultation to help you understand where you stand, what risks exist, and what options are realistically available before deadlines reduce control. Get in touch today.
FAQs
How long does Small Business Restructuring (SBR) take?
The process can vary depending on the company’s circumstances, but there are statutory timeframes that apply.
The restructuring proposal period generally lasts 20 business days, although the restructuring practitioner may extend it by up to 10 business days in certain circumstances. Once the proposal is provided, creditors generally have 15 business days to vote on whether to accept the plan.
The overall timeline will depend on factors such as the company’s financial records, creditor complexity and whether any delays arise during the preparation stage.
What happens during the 20-business-day proposal period?
This is the period during which the company and restructuring practitioner prepare the restructuring proposal.
Activities commonly include:
- Reviewing the company’s financial position,
- Identifying creditor claims,
- Assessing available assets and cash flow,
- Preparing the restructuring plan, and
- Drafting the proposal statement that will be provided to creditors.
The company generally continues trading throughout this period.
Can the 20-Day Proposal Period Be Extended?
Yes.
In some circumstances, the restructuring practitioner may extend the proposal period by up to 10 business days.
An extension is not automatic and is generally used where additional time is needed to:
- Finalise financial information,
- Clarify creditor claims,
- Complete eligibility requirements,
- Prepare supporting documents, or
- Finalise the restructuring proposal.
The extension is designed to provide flexibility where a short additional period may improve the quality of the proposal presented to creditors.
Do directors remain in control during SBR?
Yes.
One of the key features of Small Business Restructuring is that directors generally remain in control of the company’s day-to-day operations.
Unlike voluntary administration, directors continue managing staff, customers, suppliers and business activities while working with the restructuring practitioner.
How long do creditors have to vote?
Creditors generally have 15 business days to consider the restructuring proposal and cast their vote.
During this period, they assess whether the proposal offers a better outcome than alternative options such as liquidation.
What is included in a restructuring plan?
Every plan is different, but a restructuring proposal will generally outline:
- How much creditors will receive,
- How the payments will be funded,
- When payments will be made, and
- Why the proposal may provide a better outcome than liquidation.
Creditors use this information when deciding whether to support the plan.
What happens if creditors reject the plan?
The company does not automatically enter liquidation.
However, the proposed restructuring arrangement cannot proceed, and directors will need to consider alternative restructuring or insolvency options.
Depending on the circumstances, this may include Safe Harbour, informal creditor negotiations, voluntary administration or liquidation.
Does Small Business Restructuring automatically stop legal action?
The impact on creditor action will depend on the circumstances and timing of the restructuring process.
Directors should obtain advice regarding how particular creditors may be affected once a restructuring practitioner is appointed and how those creditors may participate in the restructuring process.
Can the company keep trading during SBR?
Usually, yes.
One of the objectives of Small Business Restructuring is to allow viable businesses to continue operating while a restructuring proposal is prepared and considered by creditors.
Continuing to trade can help preserve business value and support the company’s ability to meet its obligations under any approved plan.
What role does the restructuring practitioner play?
The restructuring practitioner helps assess eligibility, reviews the company’s financial position, assists with preparing the restructuring proposal and oversees the process.
Importantly, the practitioner does not take control of the business. Directors generally remain responsible for day-to-day operations throughout the restructuring process.
