Pouring a new foundation: How SBR rescued a Victorian labour hire company

Case study:

Industry: Labour Hire
Location: Victoria
Employees: 15 (fluctuating between 10–30)
Annual Revenue: ~$600,000
Solution: Small Business Restructuring (SBR)

Background:

A familiar path to friction

It often starts as a short-term fix. Facing cash-flow pressure in the thin-margin construction sector, a Victorian labour hire firm turned to lenders of last resort to plug funding gaps.

What began as a way to keep wages paid and operations moving quickly escalated. High interest rates, upfront fees, and aggressive repayment terms compounded the strain, tightening the company’s financial position with each passing month. In an industry with limited assets, there was little room to absorb the impact. By the time underlying issues – including bad debts and false timesheets – surfaced, the business was under significant pressure.

The challenge:

The “perfect storm”

The situation reached a breaking point when mounting creditor pressure – particularly from the ATO – pushed the company into the Small Business Restructuring (SBR) process. However, the path was immediately blocked by two critical hurdles:

• The Receiver: Just as a pathway forward was being developed, a third-tier lender appointed a Receiver. The stakes lifted immediately.
• The Licence: The business faced losing its non-transferable labour hire licence. The Victorian Labour Hire Authority sought justification for why it should remain in place. Without the licence, there would be no business to restructure.

The solution:

A strategic balancing act

Jirsch Sutherland Partner Andrew Mattinson was appointed as Small Business Restructuring Practitioner, working closely with the director and accountant to stabilise the business. The strategy required managing the secured creditor while simultaneously defending the company’s right to operate.
“Our focus was on putting forward a commercially realistic plan – one that gave creditors a better outcome, while allowing the business to continue operating,” explains Mattinson.

Jirsch Sutherland also engaged directly with the Receiver to ensure their appointment didn’t derail the restructuring process. “This case serves as a reminder that when looking to do an SBR, the interests of all stakeholders need to be managed. It’s wise for directors to get on the front foot and speak to financiers and involve them in the decision making process,” Mattinson says. “Bringing them into the process early can make the difference between a workable solution and a breakdown in negotiations.”

Simultaneously, detailed engagement with the Victorian Labour Hire Authority proved pivotal. “Retaining the licence was essential,” Mattinson says. “Without it, there’s no business – and no restructuring outcome.”

The Result:

A unanimous “yes” and jobs preserved

The restructuring plan was approved unanimously by creditors.

• Better returns: The outcome delivered around 30 cents in the dollar to creditors (including the ATO) – a significantly better result than a liquidation scenario.
• A clean slate: The business successfully shed historical debt and regained a sustainable footing.
• Employment security: 15 jobs were preserved, with the company now positioned for future growth.
  “This is where SBR can really prove its value,” says Mattinson. “In asset-light industries like labour hire, liquidation often delivers little to no return. Here, we were able to keep the business alive and deliver a meaningful outcome for creditors.”

Key takeaway

Last-resort lending can provide short-term relief, but often at a long-term cost. This matter highlights how quickly financial pressure can escalate when high-cost debt, operational issues, and regulatory risk collide.

However, it also shows that with early action, strong stakeholder engagement, and the right restructuring pathway, it’s still possible to stabilise, reset, and move forward.