SMALL BUSINESS RESTRUCTURING
Small Business Restructuring Statistics
What is Small Business Restructuring (SBR)?
Small Business Restructuring (SBR) is a streamlined insolvency process available exclusively to corporate entities (Pty Ltd).
To be eligible, a company must have admissible debts under $1,000,000 and meet other criteria before commencing.
Want to understand how SBR compares to Safe Harbour? Read our blog post for a clear breakdown.
Recommendation
Restructuring is cost-effective and offers a strong chance for business survival. Before appointing a practitioner, directors should ensure:
- Employee entitlements (including superannuation) are paid
- Tax returns are lodged
Once eligible, a Restructuring Plan can be proposed. This typically involves a lump sum or a repayment plan under 3 years.
Complete this form to receive a draft proposal.
Resources
Essential ATO, ASIC, and other government resources to help guide your restructuring journey:
Making a Small Business Restructuring Plan
Restructuring Eligibility
There are two limbs for directors to consider prior to entering into SBR:
Limb #1
Firstly, the directors of a company must have reasonable grounds to suspect that the company is insolvent or about to become insolvent and:
- the company must have less than $1,000,000 in admissible debts, excluding employee entitlements; and
- the company must not have been subject to restructuring or subject of a simplified liquidation process in the past 7 years; and
- the current and recent directors must not have been directors of a company that has been under restructuring or subject of a simplified liquidation process in the past 7 years.
Limb #2
It is not necessary to satisfy the second limb immediately, but if it cannot be satisfied within 20 business days of entering SBR, the effort of entering SBR will be wasted and the whole process at an end. You only get one shot.
The second limb requires the company to have substantially complied with the following:
- paid the entitlements of employees that are due and payable which includes superannuation guarantee owing to the ATO; and
- given returns, notices, statements, applications or other documents as required by taxation laws (within the meaning of the Income Tax Assessment Act 1997).
SBR Process
Pre-appointment
- Advisor assesses The Company’s health and prepares directors for the SBR process including Plan B if it fails
- Ensures The Company is able to meet the eligibility criteria.
- Consider Safe Harbour during this phase.
- The Draft Plan and the cashflow prepared to ensure the proposal is realistic and affordable.
Proposal Period
- Lasts for 20 business days after the SBR Practitioner is appointed.
- Company not controlled by SBR Practitioner.
- Creditors receive the draft plan early so they can comment on it. This provides feedback for developing the Final Plan.
Acceptance Period
- Final Plan issued to Creditors.
- Creditors can vote for or against the Final Plan.
- Period open for 15 Business Days.
Plan Period
Maximum 3 years.
Applying for SBR
Use this form to provide the information GM Advisory needs to prepare a basic SBR Plan. It is the starting point for determining options that might be appropriate for your Company.
