Simplified debt restructuring has been introduced to remedy some of the perceived problems with voluntary administration, particularly for small businesses (SMEs). A small business restructuring practitioner oversees the debt restructuring, but the company’s directors remain in control of the business.
Here’s an overview of the SBR Process:
Eligibility Criteria: Small businesses seeking to utilise the SBR Process must meet specific eligibility criteria outlined in the legislation. Generally, businesses must be classified as small business entities with liabilities of less than $1 million.
Appointment of a Small Business Restructuring Practitioner (SBRP): Once eligible, a small business can appoint an SBRP. These practitioners are registered professionals with expertise in restructuring and insolvency matters. They guide the business through the restructuring process and ensure compliance with legal requirements.
Development of a Restructuring Plan: The appointed SBRP collaborates with the business owner to develop a restructuring plan tailored to the business’s unique circumstances. This plan outlines proposed changes to operations, finances, and structure aimed at improving the business’s financial viability.
The Director-driven process framework gives directors more control over negotiating with creditors. This approach simplifies restructuring efforts and allows for more efficient resolution of financial challenges by empowering directors to take the lead in reaching agreements with creditors.
Creditor Involvement: During the restructuring process, creditors are notified of the business’s intention to restructure and have the opportunity to vote on the proposed restructuring plan. The plan must be approved by a majority of creditors in both number and value.
Implementation of the Plan: Upon approval, the restructuring plan is implemented. This may involve renegotiating contracts, downsizing operations, selling assets, or other measures aimed at improving the business’s financial position.
Monitoring and Compliance: The SBRP oversees the implementation of the restructuring plan and ensures compliance with the agreed-upon terms. They provide ongoing support and guidance to the business owner throughout the process.
Completion and Discharge: Once the restructuring plan is successfully implemented and all obligations are fulfilled, the SBRP issues a certificate of discharge, formally concluding the SBR Process. The business can then continue to operate with renewed financial stability.
By streamlining the restructuring process and facilitating early intervention, the SBR Process seeks to preserve jobs, safeguard livelihoods, and contribute to the resilience of the small business sector.
Businesses might turn to Small Business Restructuring (SBR) when facing tough financial times, such as big debts or falling sales. This process helps them get back on track by organising their debts and operations in a manageable way.
The benefits are clear: it eases debt load, helps manage cash better, and lets businesses negotiate new payment terms with creditors. Ultimately, it gives small businesses a shot at stability and growth. Plus, it can save jobs and keep relationships with suppliers and customers intact, setting them up for success in the long run.
Does Remedy Accounts manage your Small Business Restructure? No. We work in conjunction with one of Australia’s leading SBR specialists, a registered liquidator who specialises in business turnaround, distressed debt negotiations, corporate and personal insolvency matters.
If you think that Small Business Restructure might be what you need, we can refer you to our colleague for advice.
Email us.