A Small Business Restructuring (SBR) Practitioner is an independent registered liquidator who oversees the SBR process, assesses eligibility, helps prepare the proposal, and facilitates creditor voting. Unlike a voluntary administrator or liquidator, they do not take control of the company. Directors remain responsible for day-to-day operations while the practitioner manages the restructuring process.
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On This Page
- Introduction
- Who Can Act as a SBRP?
- Duties
- When Is the Practitioner’s Consent Required?
- Common Misconceptions
- What to Expect
- Next Steps
- FAQs
Introduction
During SBR, directors assume that appointing a small business restructuring practitioner means losing control of the company or handing over responsibility for running the business. However, the process operates differently than voluntary administration or liquidation.
The restructuring practitioner plays an important role in helping the company navigate the SBR process, but they do not take over day-to-day operations.
A Small Business Restructuring Practitioner is an independent insolvency professional appointed to oversee the Small Business Restructuring process.
Every company that enters SBR must appoint a practitioner. The process cannot proceed without one.
The practitioner’s role is to help ensure the restructuring process complies with the legislative requirements, while assisting the company to prepare a proposal that can be presented to creditors.
Importantly, the practitioner does not take control of the company.
Instead, they work alongside the directors, reviewing the company’s financial position, helping prepare the restructuring proposal and overseeing the process from appointment through to creditor voting and, if approved, implementation of the restructuring plan.
This guide explains who can act as a Small Business Restructuring Practitioner, what they do, what they do not do, and what directors should expect when working with one.
Who Can Act as a SBRP?
Only a registered liquidator can act as a Small Business Restructuring Practitioner.
This is a legal requirement under Australia’s Small Business Restructuring framework and applies to every SBR appointment.
Registered liquidators are licensed insolvency professionals under the Corporations Act (2001), who are subject to regulatory oversight and professional obligations. They have experience dealing with financially distressed companies, creditor claims, restructuring proposals and insolvency procedures.
The requirement helps provide confidence to creditors that the restructuring process is being administered by an appropriately qualified and independent professional.
Before accepting an appointment, the practitioner must also provide their consent to act and satisfy the independence requirements that apply to the role.
Duties
What They Can Do
The restructuring practitioner plays a central role in administering the Small Business Restructuring process.
Their responsibilities typically include:
- Assessing whether the company appears eligible for SBR,
- Reviewing the company’s financial information,
- Assisting with the preparation of the restructuring plan,
- Assisting with the preparation of the proposal statement provided to creditors,
- Making declarations required under the restructuring process,
- Facilitating the creditor voting process,
- Providing consents where required,
- Dealing with certain disputes and procedural matters, and
- Overseeing the implementation of an accepted restructuring plan.
One of the practitioner’s most important functions is helping ensure creditors receive sufficient information to make an informed decision about the proposal.
While the practitioner assists with preparing and administering the restructuring process, they do not advocate for either the directors or the creditors. Their role is to act independently and help ensure the process is conducted properly.
What They Cannot Do
A common misconception is that the practitioner takes over the company in the same way a voluntary administrator or liquidator would.
That is not how Small Business Restructuring works.
The practitioner generally does not:
- Take control of the company,
- Replace the directors,
- Manage employees,
- Run business operations,
- Negotiate sales with customers,
- Make day-to-day commercial decisions, or
- Guarantee that creditors will approve the restructuring plan.
Instead, directors remain responsible for operating the business while the practitioner oversees the restructuring process.
This distinction is one of the key reasons SBR is often referred to as a “debtor-in-possession” restructuring model.
When Is the Practitioner’s Consent Required?
Although directors generally remain in control during SBR, there are situations where the practitioner’s consent may be required.
Depending on the circumstances, practitioner consent may be required for:
- Certain transactions during the restructuring period,
- Certain dealings involving company property,
- Transactions that fall outside the ordinary course of business, or
- Other actions prescribed under the restructuring framework.
This requirement exists to help protect creditors and maintain the integrity of the restructuring process.
Common Misconceptions
Myth: “The practitioner takes over my company.”
Reality: Directors generally remain in control of the business throughout Small Business Restructuring.
The practitioner oversees the restructuring process, but they do not take over management, operations or day-to-day decision-making.
Myth: “The practitioner works for the directors.”
Reality: The practitioner is an independent professional.
While they work closely with directors during the restructuring process, their role is not to act solely in the directors’ interests. They must perform their duties independently and in accordance with the requirements of the restructuring framework.
Myth: “The practitioner can force creditors to accept a proposal.”
Reality: Creditors decide whether to accept the restructuring plan.
The practitioner can assist with preparing the proposal and administering the voting process, but they cannot compel creditors to vote in favour of the plan.
Myth: “The practitioner guarantees the business will survive.”
Reality: No practitioner can guarantee a successful outcome.
The success of a restructuring proposal depends on factors such as the company’s financial position, the quality of the proposal, creditor support and the ongoing viability of the business.
The practitioner’s role is to help facilitate the process, not guarantee the result.
What to Expect
Directors should expect the practitioner to play an active role in guiding the restructuring process from beginning to end.
A restructuring practitioner will typically:
- Assess eligibility for SBR,
- Explain how the restructuring process works,
- Review financial and creditor information,
- Assist with preparing the restructuring proposal,
- Prepare or review documents provided to creditors,
- Communicate procedural requirements,
- Facilitate creditor voting, and
- Help ensure compliance with the restructuring framework.
The practitioner may ask directors for substantial information during the process, including financial records, creditor details, tax information and cash flow forecasts.
Before your first consultation, it helps to understand both the process and the information you’ll likely be asked to provide.
Next Steps
A Small Business Restructuring Practitioner’s role is to oversee the restructuring process, assist with preparing the proposal and help ensure creditors receive the information they need to make an informed decision.
However, unlike a voluntary administrator or liquidator, they do not take control of the business. Directors remain responsible for managing operations, employees, customers and suppliers throughout the restructuring period.
For many directors, understanding this distinction is one of the most important parts of understanding how Small Business Restructuring works.
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
Is a Small Business Restructuring Practitioner the same as a liquidator?
No.
While only a registered liquidator can act as a Small Business Restructuring Practitioner, the roles are different.
A liquidator is appointed to wind up a company and realise its assets for the benefit of creditors. A restructuring practitioner is appointed to help an eligible company propose a restructuring plan while continuing to trade.
Is a Small Business Restructuring Practitioner the same as a voluntary administrator?
No.
A voluntary administrator takes control of the company and assumes responsibility for its affairs during the administration period.
In Small Business Restructuring, directors generally remain in control of the business while the practitioner oversees the restructuring process.
Do directors lose control when a practitioner is appointed?
No.
One of the key features of Small Business Restructuring is that directors generally remain responsible for the company’s day-to-day operations.
The practitioner oversees the restructuring process, but directors continue managing employees, customers, suppliers and business activities.
Can a practitioner reject a company’s restructuring proposal?
A practitioner may refuse to support a proposal if they are unable to make the declarations required under the restructuring framework or if they believe the company does not meet the necessary requirements.
This is why accurate financial information and early eligibility assessment are important parts of the process.
Can a practitioner force creditors to accept a plan?
No.
Creditors decide whether to accept or reject a restructuring proposal.
The practitioner helps prepare and administer the process, but they cannot compel creditors to vote in favour of the plan.
Does the practitioner run the business?
No.
Directors remain responsible for running the business throughout the restructuring process.
The practitioner oversees the restructuring, while management remains responsible for day-to-day operations and commercial decision-making.
Why must the practitioner be a registered liquidator?
Only registered liquidators can act as Small Business Restructuring Practitioners under the Corporations Act (2001) framework.
This requirement helps ensure that restructuring appointments are overseen by suitably qualified insolvency professionals with the experience and regulatory oversight necessary to administer the process.
More on this: Registered liquidators | ASIC
How do directors and the practitioner work together?
During SBR, directors continue operating the business and provide the financial information needed to prepare the restructuring proposal. The practitioner reviews that information, assists with the proposal, facilitates creditor voting and helps ensure the process complies with the relevant requirements.
In simple terms, directors run the business while the practitioner manages the restructuring process.
When is practitioner consent required?
Practitioner consent may be required for certain transactions during the restructuring period, particularly where those transactions fall outside the ordinary course of business.
Directors should consult the practitioner before undertaking significant transactions to ensure the company remains compliant with the restructuring framework.
What happens if the SBR practitioner believes the company is not eligible?
If the practitioner determines that the company does not satisfy the eligibility requirements, the restructuring process may not be able to proceed.
Depending on the circumstances, directors may need to address the eligibility issue first or consider alternative restructuring or insolvency options.
Can the SBR practitioner be replaced?
In certain circumstances, a replacement practitioner may be appointed.
However, any change should be carefully considered because it may affect the timing, cost and administration of the restructuring process.
Directors should seek advice before attempting to change practitioners during an active restructuring.
