It’s been 18 months since the Small Business Restructuring (SBR) Process was introduced by the federal government. And while the number of SBRs is still relatively low and there’s still some confusion about the practicalities for all stakeholders engaging with the process, matters and inquiries are steadily increasing, Jirsch Sutherland has found. And, interestingly, a key theme across all the SBRs the insolvency solutions firm has handled, is the support from a common creditor – the ATO.

“We’ve now handled SBRs across a range of sectors including entertainment, retail, construction and publishing – and the ATO agreed to each restructure and repayment plan. We believe they’re essentially saying they’ll support a viable business that has encountered some form of extraordinary headwind (such as COVID) and which needs a financial restructure – or ‘balance sheet prune’ – knowing that by restructuring, the business will return a greater amount to creditors than simply closing down. All of the SBR matters my colleagues and I have handled provided a return to creditors, as well as preserved the businesses and jobs. For several of the businesses, it’s enabled them to grow.

“With the ATO now back in debt collection mode, the supportive nature of the ATO for the SBRs we’ve undertaken is certainly a positive take-out message for struggling businesses with tax debts.”

Benefits of an SBR:

• Greater engagement with the ATO.
• Greater return to creditors compared to what would be achieved if the business is wound up.
• Early intervention: at the first sign of financial distress, it enables a business to go to creditors and ask for help.
• Simplicity: SBRs are simplified, shorter and less regulated.
• Control: directors stay in control of their business during the process.
• Protection: directors are protected from being liable for insolvent trading and from personally repaying the entire company tax debt.
• Lower costs: the process is designed to reduce access costs for small business.
• Specialist practitioners: a qualified SBRP manages the process, ensuring compliance and helping protect directors.

Jirsch Sutherland has 15 SBRPs around the country. We understand the SBR process and work closely with accountants, directors and other advisers to develop viable solutions. We also provide obligation-free consultations.