Quick summary
Once a restructuring plan is accepted, directors stay in control while the practitioner’s role narrows to managing payments. The company is released from its debts once the plan is fully carried out — but a missed payment, left unfixed for 30 business days, can end the plan and bring the original debts back.
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Table of contents
- Introduction
- When Is a Restructuring Plan “Made”?
- Who the Plan Binds
- Practitioner’s Role After Acceptance
- Day-to-Day Control
- Ongoing Obligations
- How and When the Plan Ends
- What Happens if the Plan Terminates Early
- Practical Steps
- FAQs
Introduction
While Australian company directors tend to focus more on the acceptance of an SBR plan, only accepting the restructuring plan doesn’t pause the situation — it creates a binding legal arrangement with real consequences in case of non-compliance. If a payment is missed, for example, the company has a 30-business-day window to fix it before the plan terminates and the original debts become payable in full again.
This guide explains what changes immediately after acceptance, what stays the same, and the specific events that can bring the plan to an early end.
Keeping track of key dates matters just as much after acceptance as before it.
When Is a Restructuring Plan “Made”?
A restructuring plan doesn’t take effect the moment creditors’ votes are counted. It becomes “made” either:
- the day after a specified conditional event occurs (where the plan is conditional on something happening within 10 business days of acceptance), or
- the day after the acceptance period ends.
Once made, the plan carries the same force as a deed signed by every party — without needing each creditor to actually sign anything themselves.
Who the Plan Binds
Not every party is bound the same way.
Ordinary Unsecured Creditors
The plan binds the company’s ordinary unsecured creditors. This includes:
- the company,
- its officers and members,
- the restructuring practitioner, and
- any creditor with an admissible debt covered by the plan.
This is the core group the plan is designed to affect — their right to chase the original debt outside the plan is replaced by whatever the plan provides instead.
Secured Creditors
How a secured creditor is bound depends on their security value against their debt:
- If their security is worth less than their debt, the plan binds them only for the shortfall
- If their security is worth equal to or more than their debt, the plan only binds them if they agreed to it
Moreover, making the plan doesn’t automatically stop a secured creditor from enforcing their security — unless they agreed to a proposal that specifically restricts this, or the court orders otherwise.
A secured creditor who never agreed to be restricted generally keeps the practical ability to enforce their security, even while the plan covers their unsecured shortfall.
Owners and Lessors of Property
If the company uses property under a lease or similar arrangement, the owner or lessor’s rights over that property aren’t affected by the plan — unless they specifically agreed to a proposal that changes this, or the court orders otherwise.
This carve-out doesn’t apply to PPSA retention-of-title property, where the owner or lessor is instead treated as a secured creditor under the rules above.
Practitioner’s Role After Acceptance
Once the plan is made, the practitioner’s job shifts. Instead of overseeing the restructuring process, they now:
- receive money from the company and hold it on trust
- pay that money to creditors according to the plan
- realise company property, if the directors ask them to
They also stay available to answer questions from creditors and the company — but their role is narrower now, since the major decisions about the plan’s content were already settled by the time it was made.
Day-to-Day Control
Directors stay in control of daily operations of the company, both before and after the plan is made. The restructuring practitioner never takes over management at any point in the SBR process — this is what sets SBR apart from voluntary administration, where an external administrator does take control.
That means trading, staffing, and ordinary commercial decisions stay with the existing directors for the life of the plan, as long as the company keeps meeting its payment obligations under the plan, plus its usual legal obligations, including tax compliance.
Ongoing Obligations
Tax lodgements had to be current before the plan was proposed — and that obligation doesn’t stop once the plan is accepted. Falling behind afterward is taken seriously, and can prompt stronger ATO enforcement action, separate from whatever happens if the plan itself is contravened.
The practitioner will also keep an eye on whether scheduled payments are made on time, since a missed payment is what triggers the 30-business-day rectification clock covered next.
How and When the Plan Ends
There’s a set list of ways a restructuring plan can terminate, and the consequences differ depending on which one.
Successful Completion and Release
The plan ends once the company’s obligations are fulfilled, any other party’s obligations are fulfilled, and every admissible debt has been dealt with under the plan.
When this happens, the company gets back any property that was covered by the plan but didn’t need to be handed to creditors — and, critically, the company is released from every admissible debt the plan covered.
A Conditional Event That Does Not Occur
If the plan is conditional on something happening within 10 business days of being made, and it doesn’t happen in time, the plan ends the next business day after that window closes.
Contravention Not Rectified Within 30 Business Days
If someone bound by the plan breaches it, and that breach isn’t fixed within 30 business days, the plan ends the next business day after that period runs out.
This is the one that matters most for a company falling behind on payments — a missed payment is a contravention, and it starts this clock running.
Appointment of an Administrator or Liquidator
The plan also ends the day an administrator is appointed (under section 436A, 436B or 436C of the Corporations Act), or the day a liquidator or provisional liquidator is appointed — regardless of how far through the plan the company had progressed.
Termination by Court Order
The court can also terminate a plan directly. Where this happens, the plan ends on whatever date the court specifies in its order. This is a separate pathway to the ones above — for example, a creditor or other interested party can apply to the court to bring the plan to an end.
What Happens if the Plan Terminates Early
If the plan ends for any reason other than successful completion, any admissible debt not already dealt with becomes due and payable the very next business day. This undoes the debt compromise the plan had put in place — the company goes back to owing the balance of its original debts, minus whatever it’s already paid.
At this point, creditors are generally free to resume recovery action, and directors need to reassess the company’s position immediately, since the plan’s protections no longer apply. This often means considering voluntary administration or liquidation — without the extra time that would have been available had the plan gone differently from the start.
Practical Steps
Keeping an accepted plan on track mostly comes down to disciplined cash flow management and ongoing compliance — not the kind of creditor engagement needed earlier, during proposal and voting.
Your plan is more likely to reach successful completion if:
- Payments to the practitioner are made strictly on schedule — a missed payment starts the 30-business-day rectification clock
- Tax lodgements and payments stay current for the entire life of the plan, not just up to acceptance
- Any difficulty meeting a scheduled payment is raised with the practitioner immediately, before it becomes a contravention
- The company avoids taking on new liabilities that could create fresh insolvency risk during the plan period
The period after a restructuring plan is accepted comes with its own binding obligations — and a missed payment left unfixed for 30 business days can undo everything the plan was meant to achieve.
At Halo Advisory, we work for you — the director. Financial expert Greg Bartels offers a no-obligation consultation to assess your position and help you understand the best way forward. Get in touch today.
FAQs
When does an accepted restructuring plan actually take effect?
Generally the day after the acceptance period ends. If the plan is conditional on a specified event within 10 business days, it takes effect the day after that event occurs instead.
Do directors lose control of the company once the plan is accepted?
No. Directors remain in control of daily operations throughout the SBR process, both before and after acceptance. This differs from voluntary administration, where an external administrator takes over management of the company.
What does the restructuring practitioner do after the plan is accepted?
Their role narrows to receiving money from the company, holding it on trust, and paying creditors under the plan’s terms, and, if asked by directors, realising company property. They also remain available to answer creditor questions about the plan.
Are all creditors bound by an accepted restructuring plan?
Not equally. Unsecured creditors with admissible debts are bound in full. Secured creditors are bound only to the extent their debt exceeds their security value, unless they consented to more. Owners and lessors of property are generally unaffected unless they agreed otherwise.
What happens if the company misses a payment under the plan?
A missed payment is a contravention. If it isn’t rectified within 30 business days of occurring, the plan terminates, and any outstanding admissible debts become due and payable in full the next business day.
Is the company released from its debts once the plan is completed?
Yes. Once the company’s obligations, and those of other parties, are fulfilled, and all admissible debts have been dealt with under the plan, the plan terminates and the company is released from all admissible debts or claims covered by it.
Do tax obligations still need to be met after the plan is accepted?
Yes. The obligation to keep tax lodgements and payments current continues throughout the plan’s life. Falling behind after acceptance can prompt stronger ATO enforcement action, separate from the consequences of a payment default under the plan itself.
Can a court end a restructuring plan?
Yes. The court can terminate a plan by order, with the plan ending on the date the court specifies. This is separate from the plan ending due to a missed payment, a failed conditional event, or the appointment of an administrator or liquidator.
What happens to the company’s debts if the plan terminates early?
Any admissible debt or claim not already dealt with under the plan becomes due and payable the business day after termination. Creditors can generally resume recovery action, and directors need to reassess options such as voluntary administration or liquidation promptly.
