A PATH FORWARD
A plain-English guide to the process I went through myself.
What is Small Business Restructuring? Eligibility Explained.
Written by Jason, founder of Liquidation Help Australia — someone who's been through business restructuring himself.
Small Business Restructuring (SBR) is a formal, director-led process that lets an eligible company restructure its debts while continuing to trade — you stay in control of the business, rather than handing it over to an external administrator. It's genuinely one of the most useful tools introduced for small businesses in years, but it isn't available to everyone. To qualify, your company generally needs: Total liabilities of $1 million or less. All employee entitlements paid and current. All tax lodgements with the ATO up to date (the debt itself doesn't need to be paid in full, but the actual returns need to have been lodged). The company must be insolvent, or likely to become insolvent. The company hasn't used SBR or simplified liquidation in the previous seven years. If that sounds like your situation, this is genuinely worth understanding properly — it's the process I went through myself, and it gave my business a real, structured second chance rather than an ending.
The short answer.
This is the criterion that trips people up most, because it's not just 'how much do I owe the bank.' The $1 million figure covers total liabilities, which generally includes: Secured and unsecured debts. Loans, including from related parties in most cases. Unpaid invoices to suppliers. Employee entitlements that are currently due. Outstanding tax and superannuation obligations. This needs to be assessed accurately and honestly — on the specific day a Small Business Restructuring Practitioner is appointed, not on some earlier or later date. If you're not sure exactly where your company sits against this threshold, that's precisely the kind of thing worth getting a proper, accurate assessment on rather than guessing.
The other conditions, one at a time.
The other conditions, one at a time.
Any employee entitlements — wages, superannuation, leave — that are currently due and payable need to be paid before the process can proceed. Outstanding superannuation specifically generally needs to be settled within a short window (commonly around six weeks) of the practitioner's appointment to maintain eligibility. Entitlements that have simply accrued but aren't yet due don't need to be paid in advance.
Employee entitlements must be paid.
This doesn't mean your tax debt needs to be paid off — many companies entering SBR genuinely owe the ATO money. What matters is that your returns have actually been lodged. This connects directly to the same lodgement discipline that matters for Director Penalty Notices.
Tax lodgements need to be current.
SBR is built around the company continuing to operate while the restructuring plan is worked through — it needs to generate enough income to cover its ongoing operating costs (excluding the debts being restructured). If a business genuinely can't meet its day-to-day running costs at all, SBR may not be the right fit, and other pathways become more relevant.
The company must be capable of continuing to trade.
If the company (or, in some circumstances, its directors through a related company) has already gone through SBR or a simplified liquidation process within the past seven years, it generally can't use the process again during that window. For full eligibility details, see ASIC's official guidance on small business restructuring.
No prior use within seven years.
If your company meets these criteria, a registered Small Business Restructuring Practitioner works with you to develop a formal repayment plan, which is then put to creditors for a vote. If creditors approve it, the plan proceeds under the practitioner's oversight over the agreed period. If it's rejected, the company needs to consider other pathways, which might include voluntary administration or a Creditors' Voluntary Liquidation. Worth knowing: the ATO is very often a significant creditor in these situations, and evaluates proposed plans on a genuinely commercial basis — essentially asking whether creditors would recover more under the restructuring plan than they would in a straight liquidation.
What happens once you're eligible.
Frequently asked questions.
This is a common, frustrating situation, and it's one actively being reviewed — there's ongoing discussion about whether the threshold should be raised. If you're close to the line, it's worth having someone properly assess exactly what does and doesn't count toward the total before assuming you're ineligible, since some things (like certain employee entitlements) are treated differently than you might expect.
What if my liabilities are just over $1 million?
No — this is one of the biggest practical differences. In SBR, you as the director stay in control of day-to-day operations, with the practitioner working alongside you on the restructuring plan, rather than an external administrator taking over.
Do I lose control of my company during SBR, the way I would in voluntary administration?
No. The framework is specifically for incorporated companies. Sole traders, partnerships, and trusts without a corporate trustee aren't covered, though other restructuring or insolvency options may be available for those structures.
Can sole traders or trusts use Small Business Restructuring?
Generally, yes — it was specifically designed as a more streamlined, lower-cost alternative to processes like voluntary administration, which can be considerably more expensive and time-consuming.
Is SBR cheaper than other insolvency options?
No. An initial conversation is exploratory — nothing is filed, triggered, or made public just by talking something through. You stay in control of what happens next.
Does talking to someone start a process I can't stop?
Yes. Small Business Restructuring exists specifically for directors who act early and meet certain eligibility criteria — it's designed to keep the company running where possible, not wind it up. See the SBR Eligibility guide for the general criteria.
I'm not just recommending this process from the outside — it's genuinely the path that gave my own business a real second chance. If you think you might be eligible, or you're not sure, that's exactly the right time for a real conversation, not a guess.
Talk to someone who's actually been through this.
Not every situation means liquidation — is that actually true?
What does a small business restructuring practitioner actually do?
The practitioner is a registered, independent professional who reviews and helps prepare your restructuring plan and manages the process with creditors — they don't take over running the business. You and your fellow directors keep control of day-to-day operations the whole way through.
Does the ATO have to agree to the restructuring plan?
The ATO votes as a creditor like everyone else, but it's often the largest creditor by value for small businesses — in its own words, "our vote on a restructuring plan is often decisive." Worth understanding your ATO position specifically before you start the process, not after.
Want the full guide?
Get our free guide, "Where to Start: Your First Steps When Your Business Can't Pay Its Debts".