Sadly, many small businesses in Australia have been declaring insolvency of late. If you find yourself in a position where you are struggling to maintain profitability and pay down your debts, you don’t necessarily have to have your business liquidated. Instead, you can have your small business restructured as an alternative.

The Small Business Restructuring (SBR) process has several advantages that you should know about.

It’s Cost-Effective and Simplified

In January 2021, the SBR process was designed and introduced as a more affordable and straightforward alternative to traditional insolvency methods.

The SBR process gives small businesses with debts under $1 million the opportunity to remain under the control of the business’s directors while working to repay creditors. This approach is less complex and costly than voluntary administration and helps keep the business alive.

It Has a High Success Rate

Since its implementation, the SBR process has demonstrated a high success rate. Most businesses that undergo this program have their restructuring plans approved by creditors.

Between January 2021 and June 2022, 72 out of 82 restructuring plans were accepted. This indicates a strong preference for this method over liquidation.

You Can Retain Control of Your Business

When your business is liquidated, control of the company is handed over to a liquidator.

However, the SBR process allows you to maintain control of your business and keep it going. This enables you to continue operating and even helps you function more effectively during the restructuring phase. By doing so, the process facilitates better outcomes for both the business and its creditors.

In the end, restructuring keeps your business alive and capable of thriving in the future, whereas liquidation means the complete end of your business.

SBR Aligns With Global Best Practices

The SBR process is well aligned with international recommendations from bodies like UNCITRAL and the World Bank. Both of these organisations advocate for tailored restructuring frameworks for small businesses rather than outright liquidation.

Therefore, you can rest assured that the restructuring process is supported by global standards and benchmark setters. This ensures that if you are facing financial distress, you can get the help you need.

Given the current economic climate, with a 42% increase in voluntary administrations in 2023, the SBR process is an effective alternative to liquidation that you should seriously consider if your business is struggling.

The SBR process is managed by a registered liquidator. While Infuse Advisors & Accountants is not a registered liquidator, we work closely with a trusted network of experienced professionals. Contact us today to learn more.