Small business restructuring in Australia

This article was co-authored by Kylie Shaw.

Why this matters

Australia’s small business restructuring (SBR) regime was introduced on 1 January 2021 to give financially distressed small companies a faster, cheaper alternative to voluntary administration, and, crucially, to let directors stay in control while a registered liquidator (the “restructuring practitioner”) supervises the process. 
ASIC’s first review (REP 756, January 2023) examined the 82 SBRs commenced to 30 June 2022.  Its follow up, Report 810: Review of small business restructuring process 2022-24 was issued in June 2025, it analyses every SBR appointment between 1 July 2022 and 31 December 2024 (3,388 in total) and 1,260 finalised plans. The report confirms that SBRs are gaining serious traction, but also highlights form lodgement errors and a mild uptick in plans rejected by creditors. 

Uptake is accelerating, fast

The number of appointments is rapidly increasing, growing by nearly 9 times in 3 years: 

• 448 appointments in FY 2022-23 
• 1,425 appointments in FY 2023-24 
• 3,000 appointments forecast for FY 2024-25 (based on first-half numbers).

Nearly half (46%) of registered liquidators have now accepted at least one SBR appointment, up from just 6% two years ago. 

Who is using the regime?

• By geography – New South Wales 40%, Queensland 24%, Victoria 23%.
• By industry – Construction (27% of cases) and Accommodation & Food Services (23%) dominate, followed by a long tail of service sector appointments. 

Plan approval remains high, but rejection rates are creeping up 

87% of plans sent to creditors during the review period were approved. However, the transition rate from restructuring to plan has slipped from 88% (FY 22-23) to 79% (FY 24-25 to 31 Dec 24). The driver is a rise in creditor rejections (from 9% to 14%). ASIC does not pinpoint the cause, but greater creditor awareness, the larger absolute numbers of cases and the inclusion of businesses with weaker fundamentals are all likely contributors.

Outcomes to date show encouraging signs of survival 

Of the 2,820 plans approved:

• 41% are already fulfilled;
• 55% are on foot;
• only 3% have been terminated. 

Importantly, 93% of companies that fulfilled their plans by 31 March 2025 were still registered at the end of April 2025, which is a good early indicator that SBRs can deliver at least short term viability. Longer term survival rates will need to be monitored as the data matures.

The ATO is the big beneficiary of dividends

• More than A$101 million has been paid to unsecured creditors under fulfilled plans.
• The Australian Taxation Office appeared as a creditor in 93% of plans and received about 87% (c. A$88 million) of total unsecured dividends.
• The median dividend is about 20 cents in the dollar (averaging around 21 cents). 

Practitioner remuneration is stable and still modest 

Median remuneration across the whole process remains broadly unchanged (A$21,998, vs A$22,055 in REP 756).  The bulk is earned in the restructuring phase (median A$16,137) with plan phase fees typically modest (median A$6,739).  In 78% of fulfilled plans, plan phase remuneration was 15% or less of the dividend pool. 

ASIC wants cleaner data 

ASIC flags recurring errors in Form 5602 and Form 5603 lodgements, including:

• mislabelling final returns (SBR vs SBR plan);
• remuneration recorded under the wrong administration type;
• incorrect appointment dates; and
• dividends omitted from the dividend table. 

While largely administrative, these errors hamper transparency and ASIC has foreshadowed follow up with individual liquidators. 

In relation to misuse concerns there are no systemic issues yet, but vigilance required 

Stakeholder worries about low ball upfront fees, repeated use of “phoenix” behaviour, and aggressive advertising persist. However, ASIC’s data shows no evidence of widespread abuse of the regime, and the legislative safeguards (eligibility cap of A$1 million in liabilities, “once every seven years rule”, related party voting exclusions, practitioner independence requirements) remain in place to minimise the risk of SBR’s being used to facilitate illegal “phoenix” activity and other high-risk behaviour. Nevertheless, ASIC is actively encouraging reports of misconduct and has committed to continued surveillance. 

Practical tips for restructuring practitioners 

Based on Report 810 and our own market observations, practitioners should:

• Double check data entry by using ASIC’s structured data guides and the December 2024 plan template to avoid lodgement errors.
• Monitor for phoenix indicators including repeat directors, asset transfers and back to back appointments.
• Be transparent on fees, and ensure the split between restructuring and plan phase remuneration is clear and defensible.
• Engage early with major creditors (especially the ATO) as higher scrutiny is translating into more plan rejections.
• Provide holistic advice and encourage directors to tackle the root causes of distress, not merely use SBR as a short-term band aid. 

Key take away

Four years in, the SBR regime is no longer a curiosity, it is fast becoming the preferred pathway for many distressed SMEs. For creditors, heightened engagement is paying dividends (literally). For practitioners, disciplined execution and compliance will be essential as ASIC sharpens its focus. 

For further information, or to discuss how the SBR process may apply to your business or clients, please contact the authors or your usual Norton Rose Fulbright contact.