NEWS & INSIGHTS

Small Business Restructuring: A Regime Maturing but Not Without Watchpoints

The Small Business Restructuring (SBR) regime is gaining traction and momentum, as confirmed in the latest review by ASIC Report 810: Review of small business restructuring process 2022–24. Following the tepid uptake in the first 18 months from its inception (as outlined in ASIC’s earlier Report 756), this latest review shows the regime is now playing an important and growing role in assisting distressed small businesses.

Reflections on Report 810

ASIC’s tone is cautiously optimistic. The report affirms that the SBR process is starting to deliver on its policy objective: offering a streamlined and lower-cost restructuring alternative that helps viable small businesses survive.

Notably:

The take-up of the SBR process is significant -- SBR appointments more than doubled year on year since REP 756. 46% of registered liquidators have now taken up SBR appointments (compared to 6% in the previous review period).
In FY25 (up to 15 June 2025), SBRs represented 20% of all initial formal appointments. It has become a key part of the insolvency landscape and appears to be continuing to grow.
Overall plan fulfilment and company survival rates remain high (92% and 93% respectively), which supports the view that SBR has been an effective tool in small business debt restructuring.
Dividend rate, in a climbing trajectory, has overall remained modest, averaged at 21c/$, with over $101M in dividends paid, most of which (c. $88M) has been to the ATO.

Small Business, Big Turnaround: ASIC Says SBRs Are Delivering

The Small Business Restructuring (SBR) regime is proving its value. According to ASIC’s latest Report 810, more businesses are choosing SBR as a viable path to survival — with 92% of the companies still active post-SBR and over $101 million returned to creditors. As uptake grows and return rate climbs, the message is clear: when done right, SBR works.

Practitioners’ Remuneration has remained stable, charging more in the Restructuring phase than in the Plan phase (average total fee of $23,843). However, we keep monitoring the following watchpoints:

Acceptance rate has declined since the last review period, signalling closer scrutiny of creditors, in particular, the common major creditor in most SBR - the Australian Taxation Office (ATO), who has been looking more closely into (1) tax compliance history, (2) directors and other related party transactions, and (3) possible unfair advantage over other businesses since April 2025 (see our previous article, ATO changes stance on Small Business Restructuring for more).
Inaccuracy in form lodgements and inconsistency in data classification persist, which may frustrate the data quality submitted to the regulator. ASIC intends to follow up with targeted communications and data quality initiatives.
Concerns persist around the potential misuse of SBRs, including to facilitate illegal phoenix activities. While no widespread misuse has been detected, isolated red flags may exist.
We note that the SBR mechanism may only be used once every seven years. Stakeholders will monitor with interest any impact of this restriction on SBR numbers and acceptance rates as we approach 2028 (seven years from enaction of the legislation).

Although the SBR was initially designed to rescue viable small businesses with COVID legacy debts, the relevant legislation is far from simple. We are glad to see that with the increasing awareness of this regime, more small businesses are utilising it to restructure their debts. The success rate indicates that the process seems to work effectively to keep small businesses afloat with a higher return to creditors than would be achieved in an immediate winding-up.

In order to prevent the misuse of the regime for businesses to gain unfair advantages over other businesses (which has become a focus of the ATO), it requires the combined efforts of all stakeholders (including directors, creditors and insolvency practitioners) to safeguard the integrity of the SBR processes.

“The SBR regime is finding its feet — showing real promise in keeping small businesses afloat. But success hinges on trust and integrity. As uptake grows, so too must the vigilance of practitioners, creditors and regulators to ensure it remains a fair and effective solution.”

Jessie Wang

| Wexted Advisors

| Registered Liquidator & SBR Specialist

The table below summarises key findings from ASIC REP 810 compared with those from REP 756.

Category	Findings / Data (REP 810) Period 1 July 2022 – 31 December 2024	Findings / Data (REP 756) Period 1 January 2021 – 30 June 2022	Observations
Uptake of SBR	3,388 SBRs commenced 1,260 finalised SBR plans (Forms 5603 lodged by 31 March 2025) 46% of registered liquidators took on SBR appointment Construction (27%), Accommodation & Food Services (23%) NSW (40%), VIC (24%), QLD (23%)	82 SBR appointments 47 effectuated SBR plans 6% of registered liquidators took on SBR appointments Accommodation & Food Services (22%), Construction (21%) NSW (44%) and VIC (34%)	Significant increase in the uptake in SBRs and SBR plans. The same two industries remain the most active adopters. Geographic concentration remains in NSW and VIC, while QLD is catching up.
Outcomes of SBR appointments	88% of the SBRs commenced in FY23 transitioned to plans 79% of SBRs commenced in the first half of FY25 transitioned to plans Non-acceptance rate: 9% FY23 to 14% FY25 Termination rate: 3% FY23 to 7% FY25 In this Review Period: - 3,227 (95%) SBRs resulted in plans sent to creditors - 2,820 (87%) proposed plans were approved by creditors 92% of the fulfilled SBR plans by 31 March 2024 remain registered as at the end of April 2025. 93% of the fulfilled SBR plans by 31 March 2025 remain registered as at the end of April 2025.	88% of the SBRs commenced in the Review Period transitioned to plans Non-acceptance rate: 8% Termination rate: 2% In this Review Period: - 78 (95%) SBRs resulted in plans sent to creditors - 72 (92%) proposed plans were approved by creditors 66% of the companies whose proposed plans were accepted remained registered as at the end of December 2022.	Rate of transitioning into plan phase declined. Plan acceptance rate declined. Successful rate declined. Rejection and Termination rates increased. Taking active registration as a sign of survival, the rate of survival post-SBR increased, indicating effective use of SBR for business debt restructuring. Due to the short time the SBR regime has been in place and the length of time a plan can take to be fulfilled (or terminated), insufficient data is currently available to assess whether the SBR regime is supporting longer-term business survival.
Creditors and dividends	In 87% of finalised plans, total creditors under $800K Most finalised SBRs (75%) involved companies that owed creditors less than $600K Median unsecured debt: $359,082; Average: $427,593 ATO was a creditor for at least 93% of fulfilled plans More than $101M dividends have been paid to unsecured creditors Average rate of fulfilled plans: 21c/$ c.87% of dividends (c.$88M) paid to the ATO	Most plans (79%) owed creditors between $53K and $600K ATO was a creditor for 89% of the plans commenced in the Review Period, representing 50-100% of the total admissible debts. Average rate of fulfilled plans: 15c/$	SBR adopters' debt level varies with the majority under $600K. ATO remains a major affected creditor in most SBRs. Dividend rate increased and continues to climb.
Practitioners' remuneration	Median remuneration: $21,998; Average: $23,843 Median remuneration for Restructuring phase: $16,137; Average: $16,665 Median for Plan phase: $6,739; Average: $9,544 (78% plans paid remuneration <15%)	Median remuneration: $22,055; Average: $21,670 Median remuneration for Restructuring phase: $12,940; Average: $13,694 Median for Plan phase: $4,735; Average: $6,361 (83% plans paid remuneration <20%)	Median overall remuneration remains at a similar level as the previous Review Period. Average overall remuneration increased by c.10%. Practitioners charge more for the Restructuring phase than for the Plan phase. Average remuneration for Restructuring phase increased by c. 22% Average remuneration for Plan phase increased by c. 50%.
Concerns raised about potential misuse of the SBR process	Concerns received from stakeholders over Practitioners' fee structure, potential failure to address root causes of company failure, potential misuse to facilitate illegal phoenix activity, and potential inappropriate promotion of SBR services. No widespread misuse identified.	Concerns raised in PJC Inquiry incl. $1M threshold too low, tax lodgements requirements, complex process, potential insurance and licensing issues	With the increasing awareness of the process, SBR appears no longer to pose much insurance or licensing issue. SBR appears effective in debt restructuring for small business of debts under $1M. The legislative safeguards seem to work to prevent any widespread misuse. ATO as the major creditor is playing an increasingly important role in safeguarding public interest (as reflected in the increasing rejection rate).
Compliance and forms	Inaccuracy in form lodgements Inconsistency in categorising transactions	Inaccuracy in form lodgements Inconsistent provision of information by practitioners Unclear wording	Provision of information seems to have improved, while inaccuracy in form lodgements persists. Practitioners should provide further internal training and improve internal checklists and review processes.