When the Small Business Restructuring (SBR) regime commenced in January 2021, opinions were divided.
Some viewed it as a long-overdue tool that would give viable small businesses a realistic opportunity to restructure and survive. Others questioned whether directors, creditors and advisers would embrace a new process sitting somewhere between informal workouts and traditional external administration.
Five years on, the regime has firmly established itself within Australia’s insolvency landscape, with 1,050 appointments recorded in the first nine months of 2026.
Yet the most interesting story may not be the milestone itself.
The data suggests that after a period of rapid growth, fewer distressed businesses are choosing restructuring at all. Instead, increasing numbers appear to be moving directly into liquidation or receivership, raising important questions about the economic pressures facing Australian small businesses and the willingness of creditors to support restructuring outcomes.
More Than Just a Number
According to appointment data, SBR volumes have evolved significantly in recent years:
- 2023: 933 appointments
- 2024: 2,440 appointments
- 2025: 2,374 appointments
- 2026: 1,051 appointments to September
The sharp increase between 2023 and 2024 demonstrated that SBR had gained acceptance amongst directors, accountants and advisers as a genuine restructuring tool.
What is becoming increasingly apparent, however, is that appointment numbers are now moving in the opposite direction. Based on current trends, 2026 is likely to finish with approximately 1,400 appointments, representing a decline of more than 1,000 appointments compared to both 2024 and 2025.
Ordinarily, a reduction in restructuring appointments might be viewed as positive news. However, broader insolvency trends and industry experience suggest a different story.
Rather than indicating improving business conditions, the decline may reflect fewer opportunities for viable businesses to restructure before creditor action escalates.
Why Are Fewer Businesses Restructuring?
The significant increase in SBR appointments during 2024 and 2025 coincided with a period of considerable pressure on small businesses, including:
- elevated interest rates;
- higher labour costs;
- rising input costs;
- increased ATO debt recovery activity; and
- reduced discretionary consumer spending across many sectors.
Historically, SBR provided directors with an opportunity to address financial distress early and negotiate a compromise with creditors while maintaining control of their business.
Increasingly, however, businesses appear to be reaching advisers at a later stage of distress, often after secured creditors have already taken steps to protect their position.
In a recent interview with The Urban Developer, I noted a significant reduction in turnaround-style appointments alongside increasing receivership activity. The issue is not necessarily that fewer businesses are experiencing distress. Rather, it appears that more distressed businesses are reaching a point where restructuring is no longer a viable option.
The rise of private credit and a more assertive approach from secured lenders may also be influencing outcomes. As lenders become increasingly proactive in enforcing their security and recovering debt, many businesses may be moving directly into liquidation or receivership rather than attempting a formal restructuring process.
In that environment, the decline in SBR appointments may tell us less about business recovery and more about a narrowing window for rescue.
The Real Value of SBR
Despite declining appointment numbers, the SBR regime remains an important part of Australia’s insolvency framework.
Traditionally, discussions around insolvency were often delayed until a business had exhausted most available options. By that stage, the range of possible outcomes was usually limited.
The introduction of SBR has helped change that conversation.
Directors, accountants and advisers are increasingly discussing restructuring as a proactive strategy rather than a last resort. The existence of a formal restructuring pathway has encouraged earlier engagement and improved awareness of available options before insolvency becomes unavoidable.
Many of the businesses entering SBR today are businesses that, prior to 2021, may have proceeded directly into liquidation without any genuine opportunity to compromise with creditors or preserve value.
That shift in mindset may ultimately prove one of the regime’s most significant achievements.
Looking Ahead
Reaching 1,050 appointments confirms that the SBR regime is now an established and important part of Australia’s insolvency landscape.
However, the declining use of restructuring appointments may be the more important trend to watch.
If fewer businesses are entering restructuring and more are proceeding directly to liquidation, court liquidation or receivership, it may signal that financial distress is becoming more severe and that creditors are increasingly dictating outcomes.
As funding markets continue to evolve and lenders become more active in enforcing their rights, the challenge for directors will be recognising distress earlier and seeking advice before restructuring options disappear.
Ultimately, the significance of the SBR regime is not measured by appointment numbers alone, but by whether it remains accessible to businesses while there is still a business left to save.
