Small Business Restructuring Plan (SBRP)

Small Business Restructuring Plan (SBRP)

The Small Business Restructuring Plan (SBRP) was introduced by the Australian Federal Government in 2021 as an option for businesses facing financial stress. The purpose of the SBRP is to allow the business owner(s) time to develop a proposal to creditors in order to pay off the business’ debts, either in full or in part.

The SBRP must be administered by a Restructuring Practitioner and the proposal must detail how all debts will be paid within a 3 year period. 

Before a business can proceed with a Small Business Restructuring Plan, there are eligibility requirements that must be met (all of the below):

• • The business is unable to pay its debts when they fall due (insolvent or likely to become insolvent)
  • The business must be operated by a company
  • Total liabilities must be less than $1 million to creditors (excluding employees entitlements)
  • All employee entitlements including superannuation are up to date
  • All tax lodgements are up to date
  • The business must not have previously undergone a Small Business Restructure or a Simplified Liquidation process in the past 7 years
  • Both the current and former company director(s) acting within the past 12 months must not have been a director of a company that has utilised a Small Business Restructure or a Simplified Liquidation process in the past 7 years.

What is involved in the plan?

The first step is to ensure that the business meets the necessary eligibility requirements. Following this:

1. The directors of the company must decide that the company is insolvent or likely to become insolvent.
2. A Restructuring Practitioner is then appointed, along with the agreed remuneration amount that will be fixed for the proposal period.
3. The Restructuring Practitioner advises the company about the restructure and assists in preparing a restructuring plan.
4. The restructuring plan is circulated to creditors for their vote and if approved, the company can continue to trade. The Restructuring Practitioner administers the implementation of the plan, giving breathing space from creditors whilst strategies are in place to pay debts.
5. Once the restructuring plan terms are satisfied, the plan is then terminated

Click to download the ARITA Small Business Plan Flowchart.

Key Takeaway

If a client may be facing financial distress, it is critical that they seek professional advice from a Restructuring Practitioner immediately. By doing this, they have better chances of being eligible for the Small Business Restructuring Plan in an effort to avoid liquidation.

We provide a free confidential consultation to ensure clients know all their options when faced with unmanageable debts.