NEWS & INSIGHTS
Spotlight on Small Business Restructuring
On 28 November 2024 ASIC released an updated Restructuring Plan Template providing more information on the business and affairs of a Small Business that is part of a restructuring process. Our Small Business Restructuring Specialist Jessie Wang provides an update:
The story so far
Small Business Structuring (SBR) was introduced in January 2021. It had a slow take-up initially. There were only 83 appointments in the first 18 months since its inception, from Jan 2021 to 30 June 2022. It slowly took off in the second half of 2022. There were 447 SBR appointments in FY23 and 1,424 in FY24. ASIC statistics released on 2 December 2024 show 1,150 SBR appointments from 1 July 2024 to 17 November 2024, more than tripled that in the same period in FY24.
ATO as major creditor in most SBRs
An SBR plan is taken to be accepted by creditors if the majority in value of the voting creditors accept the plan. Therefore, the ATO, being the major creditor in most SBR cases, carries the day in those SBRs. The ATO has released an information sheet on SBR New insolvency reforms to support small business | Australian Taxation Office which outlines the key information and documents required by the ATO for its consideration and assessment of the draft plan proposals during SBR.
JESSIE WANG, SBR SPECIALIST
At the NSW Conference of the Association of Independent Insolvency Practitioners (AIIP) held in August 2024, the Australian Taxation Office (ATO) advised that the ATO was involved in 99.7% of the SBRs up to 30 June 2024, being the main creditor in 74% of those cases, and that the ATO had accepted 91% of the Restructuring Plans.
New restructuring plan template
Other creditors affected by SBRs are unlikely to be as sophisticated as the ATO. In order to provide better clarity to assist creditors in making an informed decision on an SBR plan. Following the release in 2023 of (REP 756) on the review of the small business restructuring process, ASIC held several small group insight sessions with registered liquidators, ARITA and the ATO. and updated the restructuring plan template.
A copy of the new template can be downloaded here:
THE UPDATED TEMPLATE:
- Simplifies the language,
- Includes headings with an updated layout,
- Re-orders questions to better reflect the flow of property available under the restructuring plan,
- Provide for free text and,
- Includes guidance and examples.
Compared with the old plan template, the new template strengthens transparency with creditors and operational clarity in SBR. Key improvements include expanded asset disclosure, third-party contribution tracking, and enhanced flexibility.
Looking forward
Legislative reforms are crucial to address barriers like plan modification limits during an SBR. While the new template aligns with this reform priority, further education of stakeholders and procedural refinements such as the updated restructuring plan template are needed to unlock SBR’s full potential for distressed SMEs.
Find out more about author Jessie Wang
Learn more about Wexted's SBR services
Published 6th December 2024
