Small Business Restructuring (SBR)
Our Small Business Restructuring solutions are designed to help your business overcome obstacles, regain control, and set the stage for lasting success.
THE BASICS
What is Small Business Restructuring (SBR)?
Small Business Restructuring (SBR) is a process established in January 2021 to assist small businesses struggling financially, particularly due to the COVID-19 pandemic.
SBRs enable companies to negotiate with creditors to reduce their debts while retaining control of their operations.
Unlike traditional insolvency options, SBR allows directors to remain in charge, minimising disruption and costs.
Under the Corporations Act 2001, a registered Small Business Restructuring Practitioner (SBRP) is appointed to the process. They are legally bound to find the best path forward for the creditors of the business.
As the Director of the business undergoing the SBR process, you can appoint a second planner that creates a restructuring plan that works in your best interests, as well as working with the SBRP to negotiate a plan that creates a win-win situation for the creditors they represent. Halo Advisory acts in this capacity – as your representative.
The plan will likely involve debt compromises and operational changes, but the aim of a SBR is to allow your business to resolve debts and move forward with new and improved business operations.
ELIGIBILITY
When is a Company Eligible for the SBR Process?
To qualify for the SBR process, a company must be:
- insolvent or at risk of insolvency,
- total liabilities under $1 million, including contingent liabilities but excluding secured debts,
- up-to-date with tax lodgements and employee entitlements,
- importantly, neither the company nor its directors can have participated in an SBR or Simplified Liquidation in the past seven years.
For guidance on eligibility, consulting with insolvency professionals is recommended. Get in touch with us to confirm your eligibility.
What are the advantages of an SBR?
Protection for Directors
Protection for directors from personal liability related to insolvent trading.
Breathing space
During the restructuring process, creditors are generally barred from legal actions, providing breathing space for the company.
You remain in control
Directors maintain control over daily operations, facilitating continuity.
A streamlined process
SBR is a streamlined and cost-effective alternative to traditional insolvency processes, focusing on maximising returns to creditors while helping the business regain stability.
INDUSTRIES AND SECTORS
Who does it help?
SBR is designed for corporate small enterprises (SMEs) aiming for profitability but burdened by legacy debts.
It particularly benefits sectors like hospitality, retail, and construction, often involving significant debts to the ATO or other creditors.
Businesses that can demonstrate a viable pathway to profitability are well-suited for this restructuring approach.
Businesses in these industries have benefited from an SBR process:
Retail
Trades
Auto
Construction
Manufacturing
Logistics
Professional Services
eCommerce
Hospitality
Import/Export and Wholesalers
WHY CHOOSE US
How we work together
In any SBR, there are key roles:
You, the Director: To formally commence this process, you/your Board must appoint a SBRP. You can then perform assessment and planning duties yourself and work with the SBRP, or you can appoint a second representative to help you with the assessment and planning duties.
The SBRP: the Small Business Restructuring Practitioner is registered with ASIC as a ‘registered liquidator’, and must be appointed by the Directors in order for the SBR process to begin.
Creditors: The SBRP is legally bound to represent the creditors. Creditors must await the conclusion of the SBR process to be reimbursed.
An SBR planner: This is Halo Advisory. We join this process as your representative, assessing the company’s financial status, helping to develop the Restructuring Plan, communicating with the SBRP, and overseeing the plan’s implementation.
Working with Halo Advisory
When you choose to work with us, we become your SBR planning representative.
Halo Advisory Director, Greg Bartels, is your helpful and knowledgeable guide through the entire process.
Greg performs all roles that you would otherwise need to do yourself, such as:
- assessment of your financial situation
- crafting the SBR plan
- presenting the plan to the SBRP and creditors
- negotiating the best deal and seeking approval from all parties
By engaging us as your planner, you can focus on your work, and retain control over the day to day operations of your business.
With Halo Advisory by your side, you don’t have to face financial struggles alone.
Let’s work together to map out a brighter future for your business.
Contact us today for a free, no-obligation consultation and take the first step towards financial recovery.
FAQs
Are ATO Debts Included in Small Business Restructuring?
Yes, debts owed to the Australian Taxation Office (ATO) can be included in the SBR process.
The ATO is typically a major creditor in many restructuring cases and is supportive of SBR as a means for businesses to manage their tax liabilities.
Under SBR, companies can negotiate reduced payment terms, which often leads to more manageable debt levels.
What are the Expected Outcomes of an SBR Process?
The outcome of the SBR process hinges on the approval of the Restructuring Plan by creditors.
If approved, the plan allows for debt compromises and operational changes, enabling the business to continue trading.
If rejected, the SBR ceases, and directors may explore other options like Voluntary Administration, though they are not obligated to do so.
Proactive engagement in the SBR process can significantly improve a company’s financial outlook.
Who Controls the Company during SBR?
Why is it important to act early?
Early action is crucial for successful restructuring. A Small Business Restructure process generally must be carried out within 35 days.
Addressing financial challenges promptly enhances the chances of a successful outcome and minimises disruption to operations.
By recognising signs of financial distress early, businesses can implement cash-saving measures and adapt strategies to better navigate their circumstances.
STEERING BACK ON TRACK
Voluntary Administration
By giving us control of your business, we can give you peace of mind and guidance to assessing and resolving your financial stressors.
A STRONGER FOOTING
Business Restructure
By restructuring your medium-large company, we satisfy creditors, prevent insolvency, and steer your business towards a brighter future.
WHEN IT’S TIME TO CLOSE
Creditors Voluntary Liquidation
The CVL process winds down the company when it is insolvent, cannot pay its debts as they fall due, and/or if other options are not available.
A PATH TO MASTERY
Corporate Advisory
You can always be better at business. With our specialists on your team, we can highlight best practices, and share invaluable ways to improve your business.