COVID debts, rising costs – and the restructure that kept a pub alive

An inner-Sydney pub was on the brink – until restructuring gave it a second chance. Like many hospitality businesses, the pub had been knocked off course by a period of reduced revenue during COVID. Legacy debts lingered long after lockdowns ended, and as inflation and rising interest rates pushed up costs, the pressure mounted. While the directors had introduced measures that were starting to lift revenue, the numbers still didn’t add up. Without help, closure was a looming risk.

The story is far from unique. CreditorWatch’s June 2025 Business Risk Index shows that insolvencies have plateaued but remain at historically high levels and hospitality continues to bear a disproportionate share of the strain. In fact, the April Index revealed that nearly one-in-10 hospitality businesses – including pubs – had shut down in the past year, underscoring the sector’s vulnerability.

“Pubs and other hospitality operators are really feeling the squeeze,” says Peter Moore, Partner at Jirsch Sutherland. “They’re facing weaker consumer spending, higher operating costs, and old debts that never really went away after COVID. It’s a perfect storm.”

Background: mounting pressures required urgent actions

Those pressures came to a head for the inner-Sydney pub, where pandemic debts and rising costs threatened the business’s future despite recent signs of recovery. The pub’s directors had started negotiating down some overheads and implementing operational changes that showed early revenue growth. Yet legacy debts from the COVID period, combined with ongoing inflationary pressures, kept the business fragile. With the threat of insolvency looming, the need for a structured solution began urgent.

Solution: SBR provided a fresh pour on the pub’s future

The pub’s directors engaged Jirsch Sutherland, who initiated a Small Business Restructuring (SBR), a legal framework enabling the company to continue trading and the directors to remain in control while negotiating terms with creditors.

As the appointed SBR Practitioner, Peter Moore worked closely with the directors and their accountant to formalise the steps already underway – i.e., renegotiated overheads, embedded revenue initiatives, and formulated the SBR plan for creditors to consider.

“SBR is designed to be pragmatic,” explains Moore. “It allows directors to stay in control of the operations, while giving creditors confidence that there’s a credible plan in place.”

Results: raising a glass to stability and saved jobs

The restructure achieved its aims: preserving all 17 jobs, giving creditors certainty, and enabling the pub to trade on a sounder footing. With a more sustainable cost structure, the directors could focus on the future rather than survival.

“Too often, small business owners think the only option is to close the doors,” says Moore. “This case demonstrates that viable businesses can be preserved – protecting livelihoods and offering a practical reset.”