What is Small Business Restructuring (SBR) in Australia?

SBR is a formal, streamlined insolvency process for eligible incorporated businesses in financial distress to reorganise debts while trading.

What kind of company is eligible for SBR?

Only incorporated companies (Pty Ltd) registered under the Corporations Act 2001 can use SBR. Sole traders and partnerships are not eligible.

What is the liabilities threshold for SBR eligibility?

Total liabilities, not including employee entitlements, must not exceed $1 million at the time of appointing the SBR practitioner.

Are employee entitlements important for SBR eligibility?

Yes, all employee wages and superannuation due and payable must be paid before starting an SBR plan.

Do tax lodgements need to be current for SBR?

Yes, the company must be up to date (or substantially compliant) with BAS, GST, PAYG, and other ATO lodgement requirements.

Can a company or director use SBR twice within 7 years?

No, neither the company nor its directors can have used SBR or simplified liquidation within the last 7 years.

Who oversees the SBR process?

A registered Small Business Restructuring Practitioner (SBRP), who must be a qualified liquidator, is appointed to guide and supervise the process.

Can sole traders or partnerships access SBR?

No, SBR is only open to incorporated Pty Ltd companies.

What happens if employee entitlements are unpaid?

The business is ineligible for SBR until all due and payable entitlements (including superannuation) are paid.

Must all company taxes be paid before SBR?

Not all taxes must be paid, but all returns must be current or substantially compliant. Outstanding debts can be included in the SBR plan.

Can a company with over $1 million in liabilities use SBR?

No, only companies with total external liabilities under $1 million (excluding employee entitlements) are eligible.

If I've used simplified liquidation before, can I use SBR?

No, use of SBR or simplified liquidation by the company or any director within 7 years excludes access.

Can past directors affect a company’s SBR eligibility?

Yes, if a director has recently served on another company that used SBR or simplified liquidation, this can impact eligibility.

What should a company do if it doesn’t meet SBR criteria?

Alternatives may include voluntary administration, safe harbour, or informal creditor arrangements—seek professional advice for best next steps.

What is the process for confirming SBR eligibility?

Consult with a restructuring professional or the Insolvency Group for a comprehensive assessment and eligibility checklist.

Are SBR criteria subject to change?

Criteria can change, so always check for updated rules with a specialist before starting the process.

Where can businesses get advice on SBR eligibility and restructuring?

Contact The Insolvency Group for confidential, expert support and a step-by-step SBR eligibility review.

What are the criteria for small business restructuring in Australia?

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The Criteria for Small Business Restructure

Main Criteria for Small Business Restructuring (SBR)

Incorporated Company (Pty Ltd)

Only incorporated companies subject to the Corporations Act 2001 can access SBR. Sole traders and partnerships are excluded.

Liabilities of Under $1 Million

At the time the SBR practitioner is appointed, total company liabilities (excluding employee entitlements) must not exceed $1 million. This cap ensures the process is reserved for genuinely small businesses.

Employee Entitlements Paid

All employee entitlements due and payable, including wages and superannuation, must be fully paid before entering or proposing an SBR plan. Protecting employee rights is a key safeguard of the process.

Tax Lodgements Up to Date

The company must be up to date (or substantially compliant) with its ATO tax lodgement requirements, such as BAS, GST, and PAYG. This enables accurate financial assessment for creditors and keeps the process transparent and fair.

No Prior SBR or Simplified Liquidation within the last 7 Years

Neither the company nor its current (or recent) directors can have used the SBR process or simplified liquidation within the last 7 years, unless minimal exemptions apply. This “7-year rule” prevents repeat use and potential misuse of the regime.

Directors’ Resolution of Insolvency

The board must formally resolve that the company is insolvent or likely to become insolvent, to initiate SBR. This ensures the process is used only for genuine financial distress.

Appointment of a Registered SBR Practitioner

A registered Small Business Restructuring Practitioner (SBRP), who must be a registered liquidator, must be appointed to oversee and guide the SBR plan process.

Who Is Ineligible?

Businesses are ineligible for SBR if:

They exceed the $1 million total liabilities cap.
They are not up to date with ATO lodgements.
If Employee entitlements are unpaid.
A Small Business Restructuring (SBR) or Simplified Liquidation have been used in the last 7 years (by the company or its directors).
Sole Traders who are not incorporated entities (i.e., not Pty Ltd companies).

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At-a-Glance: SBR Eligibility Criteria

Requirement	Key Details
Incorporated company (Pty Ltd)	Must be registered under the Corporations Act 2001
Liabilities <$1 million	Excluding employee entitlements
Employee entitlements paid	All due wages/super paid before SBR commenced
Tax lodgements up to date	BAS/GST/PAYG/etc, current or substantially compliant
No SBR or Simplified Liquidation within the last 7 years	Applies to the company and all directors
Board resolution of (likely) insolvency	Directors formally resolve financial distress
Registered SBRP appointed	SBRP must be a qualified liquidator

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