Small Business Restructuring (SBR) can be a lifeline for business owners facing financial distress. The streamlined insolvency process was introduced in 2021 and allows eligible businesses to tackle debt while staying operational, offering a proactive alternative to voluntary administration.
However, while the process helps businesses regain control, it is not without challenges. Owners and stakeholders may face anxiety about how long the process will take, the steps involved, and what outcomes they can expect. Understanding the timeline is critical for managing expectations and fostering confidence among employees, creditors, and other key stakeholders.
If you’re considering SBR, this guide will help you understand the process, the factors influencing its timeline, and why careful planning is essential for success.
Understanding the SBR Process
The Small Business Restructuring process offers a structured path for resolving financial difficulties. By working with a Small Business Restructuring Practitioner (SBRP), companies create a debt restructuring plan to repay creditors while remaining in control of operations.
However, rushing through the process without addressing core business challenges can lead to failure. A poorly executed plan may only provide temporary relief, leaving cracks in the business structure that could reappear later.
To prevent businesses from repeatedly entering insolvency processes (and encourage them to make the most of the opportunity), businesses are ineligible to undertake SBR if the company or its directors have used the Small Business Restructuring or Simplified Liquidation process within the past seven years.
Taking the time to implement long-term solutions ensures the restructuring process delivers lasting results.
The Small Business Restructuring Timeline
While the restructuring process will look different for everyone, it will generally follow a standard path.
Initial Steps (Approximately 1-2 Weeks)
The restructuring process begins with the appointment of an SBRP. Directors must:
- Confirm the company’s eligibility.
- Declare insolvency or a likelihood of insolvency.
Once appointed, the SBRP works closely with directors to assess financial records, identify issues, and begin drafting the restructuring plan.
Drafting and Presenting the Plan (Approximately 3-5 Weeks)
Within 20 business days, the company must submit its restructuring plan to creditors. This document outlines repayment terms, usually calculated as “cents in the dollar,” and includes a Restructuring Proposal Statement listing all debts.
If additional time is needed, the SBRP can extend this period by up to 10 business days, depending on the complexity of the case.
Creditor Voting (Approximately 2-3 Weeks)
Creditors have 15 business days to review and vote on the proposed plan. Approval requires more than 50% of creditors (by value) in responding creditors to agree. During this time, directors must maintain open communication with creditors to address concerns and secure support.
Implementation and Ongoing Compliance
Once approved, the company begins repaying creditors per the agreed terms. The SBRP oversees this phase, ensuring compliance with the plan while the company continues operations.
The repayment period varies, depending on the plan’s structure and the company’s financial capacity — typically lasting months or up to three (3) years.
Factors That Influence the SBR Timeline
The timeline for SBR can vary based on:
- Company Complexity: Larger or more intricate businesses may take longer to assess and restructure.
- Stakeholder Engagement: Delays in creditor voting or stakeholder resistance can extend the process.
- Compliance Readiness: Companies with outdated records or unpaid employee entitlements must address these issues before presenting their plan.
- Financial Health: The urgency of financial challenges may dictate how quickly actions are implemented.
A well-prepared business with clear communication and strong stakeholder support can navigate the process more efficiently, so working carefully and delicately is essential.
Why Professional Guidance Matters
Engaging an insolvency practitioner as soon as you see warning signs can make all the difference. They ensure:
- Proper Documentation: Everything is prepared accurately — from tax lodgements to restructuring statements
- Compliance: The prevention of legal risks like lockdown DPNs.
- Long-Term Solutions: Operational inefficiencies that could hinder future growth are addressed.
By taking a proactive and informed approach, business owners can reduce stress, foster trust, and improve the likelihood of a successful restructuring.
Navigating the SBR Timeline with Confidence
Understanding the timeline for Small Business Restructuring is crucial for making informed decisions. While the process varies, proper planning and expert guidance can minimise delays and maximise the chances of a positive outcome.
At SALEA Advisory, we specialise in helping small businesses navigate financial challenges. From assessing eligibility to managing creditor negotiations, our team ensures you are supported at every step of the journey.
If you’re considering Small Business Restructuring or need help stabilising your business, contact us today for expert advice tailored to your needs.
Unsure if SBR is the right move? Download our Guide to Small Business Restructuring for everything you need to know.
