Accountant's Guide To
The Small Business
Restructuring Process

Compared with traditional options to overcome financial difficulty, the SBRP is easier, faster, lower cost, and more discrete for Company Directors.

Only your Creditors at the time of entering the SBRP are directly notified, and often this is only the ATO.

To help you understand the funds you may require to undertake the SBRP, you will need to calculate the likely costs and the return you will pay to Creditors.

We generally estimate that total costs for a successful SBR Plan will be between $7,000 to $12,000 upfront plus an administration fee of 10% on the reduced amount of debts owed under the SBR Plan.

As a starting point, a return of 20 cents in the dollar be paid to Creditors in satisfaction of their debts. The actual return you propose to Creditors may vary up or down depending on what your Company can afford, the total owed to your Creditors, Creditors’ attitudes to supporting your Business, and whether Creditors would receive a higher return under an alternative option, such as liquidation.

No. Costs are set at a fixed fee for the initial restructuring period, and if your SBR Plan is accepted, a fixed percentage by law. Both of these fees are approved by you before the process commences.

A common complaint about restructuring processes, such as voluntary administration, is that costs can blow out and there can be nothing left for Creditors.

This isn’t what happens with the SBRP.

With SBRPs and Revive Financial there are a few things in your favour.

Firstly, we’ve developed our SBRP offering above the standard package to make it appealing for Creditors to approve your SBR proposal.

Next, we carefully plan out each SBRP to avoid surprises. The ATO is very supportive of genuine restructuring proposals, stating they have approved 90% of proposals.

This approach makes Revive Financial one of Australia’s biggest providers of successful SBRPs.

Any restructuring process is a bit like surgery. You don’t want to know what happens on the operating table, you just want it to be a success. Which is what we aim to deliver with every SBR Plan we are engaged on.

The benefit of the SBRP is that you as Director retain control of your Business throughout the process. Whether your SBR Plan is accepted or not, control remains with you and no decisions are forced on you.

This is good for a number of reasons: lower costs, lower risk, lower publicity and better chances of success.

With good planning the SBRP can be completely finalised in as little as a month, however it could be agreed to last up to three years.

The restructuring period allows up to 20 Business days to submit your SBR Plan to Creditors. It can also be extended by up to 10 more Business days. Your Creditors then have 15 Business days to accept or reject your plan.

From there, it depends what your SBR Plan is. If you have Company funds, personal funds or finance approved, a lump-sum amount can be paid and distributed to your Creditors quickly, bringing the restructuring to an end.

Alternatively, to preserve your cashflow or to provide an acceptable level of return to your Creditors, you may propose regular instalments payable weekly, monthly, or as otherwise suits. These instalments can last as long as suits you, up to a maximum period of three years.

While a Company is in an SBR Plan it is recorded as an ‘external administration’ with ASIC, and the Business is also listed on the ASIC Insolvency Notices website.

It’s also important to remember that if your Company has debts it can’t pay, particularly to the ATO, its credit rating and reputation are already problematic. Further trading without addressing underlying issues generally worsens the scenario.

It’s also no secret that banks won’t lend to Companies with ATO debt and often the finance you can get in these circumstances are high interest, short-term loans which can worsen your position.

The good news is that with an SBR Plan, within four to seven weeks your balance sheet can be back in the black and your Company is back to showing as ‘registered’ with ASIC. This puts you in a better position to obtain finance or credit in future, and if you do so it’s to grow your Business, rather than just ‘robbing Peter to pay Paul’.

The best place to start is to call us. You might not feel ready for it, but we often find conversations help clarify how Directors feel about their Company, provide hope of a better future without debt, and outlay a clear plan of the steps to achieve this.

Other times, a Director may realise from our discussions that they don’t need a restructure, in which case the (no cost, no obligation) call with us simply confirms they’re on the right path. Or perhaps they recognise they’re just trading on because they feel they have to despite things not improving, and they come to understand the benefit of closing their venture to move on from the stress and financial burden.

Reducing your debts with minimal impact does seem very generous. This is exactly why we’re so excited to now be able to offer SBRPs to help small businesses out of financial difficulty.

Simple. It’s the Federal Government’s way to help Businesses get back on their feet.

The Government introduced the SBRP in early 2021 to provide a low-cost, flexible pathway to recovery for Businesses impacted by the COVID pandemic and related lockdowns. It’s in noone’s interest to see Small Businesses fall over due to circumstances outside their control.

A key pillar of the Government’s COVID support plan was leniency on payment of ATO debts. Consequently, collectable debt rose by 69 per cent to $44.8 billion in 2021/22, up from $26.5 billion in 2019 before the COVID-19 pandemic hit.

While the outcome is good, entering what is technically an insolvency appointment, is not an easy decision. Like most Business Owners you would pay your debts in full if you could, but the pandemic has put many in a position where they can’t afford to. The SBRP is the opportunity to give you back control of your Business finances.

As with any restructuring process, there can be shocks and disruptions. Suppliers could put you on COD, licence impacts need to be considered and a poorly prepared restructuring plan may not be accepted by Creditors. That’s why speaking to us as soon as you’re struggling to pay your ATO and other debts, allows proper planning and mitigation of any potential risks – helping ensure success!

As building licences are managed by each state, we’re still working through these on a caseby- case basis. Generally speaking, if your licenced Company is undertaking the SBRP, you should avoid triggering other potential licence issues under the respective regulations. These may include actions for non-payment of subcontractors or suppliers, or issues arising from failing to complete contracted works.

In Queensland, the QBCC has taken a practical approach that subject to cancellation provisions not otherwise being triggered, the restructured entity will need to satisfy the Minimal Financial Requirements of the respective licence class, noting that these are now required to be prepared as the more involved General Purpose Financial Reports (GPFR).

In other states it appears that similar approaches are being taken to support building and construction Companies. We recommend making enquiries to satisfy yourself before entering any such engagement.