Navigating Small Business Restructuring in Australia: A Strategic Framework for SME Recovery

Introduction

In the current economic climate, many otherwise viable Australian small businesses are experiencing financial distress due to rising input costs, subdued consumer demand, and increased ATO enforcement activity. For company directors under pressure to meet creditor obligations while maintaining trading operations, the Small Business Restructuring (SBR) framework, introduced in 2021, provides a timely and structured alternative to formal insolvency or liquidation.

At Lowe CFO Advisory, we support business owners and directors in navigating this process by delivering clear, actionable financial modelling, board-level analysis, and strategic insight that underpins successful restructure outcomes.

What Is a Small Business Restructure?

The Small Business Restructure (SBR) framework was designed to give financially distressed but fundamentally viable companies a low-cost, streamlined option for reorganising their debts. Unlike traditional voluntary administration, the SBR allows directors to retain control of the company throughout the process, while working with a registered Small Business Restructuring Practitioner (SBRP) to develop and implement a restructuring plan.

This approach gives businesses a unique opportunity to negotiate with creditors from a position of transparency without surrendering operational control.

Key Eligibility Criteria

To qualify for a Small Business Restructure, a company must meet specific conditions at the time of appointment:

• The business must have total liabilities of less than $1 million, excluding employee entitlements

• All outstanding employee entitlements must be paid in full before a plan is proposed

• The business must have lodged all ATO returns that are due, even if not yet paid

• The company must not have undertaken a small business restructure or simplified liquidation in the previous seven years

These thresholds are designed to limit the framework to genuinely small businesses that have the potential to recover if given breathing room and a sustainable plan.

The SBR Process Explained

The Small Business Restructure process typically unfolds over four to six weeks and involves the following core steps:

1. Director declaration and appointment - company directors declare insolvency concerns and formally appoint a registered SBRP

2. Restructuring plan development - a proposal is prepared outlining how much creditors will be paid and over what timeframe

3. Creditor review and voting - the proposal is circulated to creditors, who have 15 business days to vote on the plan

4. Plan execution - if approved by a majority of creditors by value, the plan becomes binding and is implemented under the supervision of the SBRP

This process provides a clear legal framework while avoiding the costs, stigma, and complexity often associated with voluntary administration or liquidation.

The Role of Financial Modelling in Restructure Success

While the SBR framework is procedurally straightforward, its success hinges on a company’s ability to present a credible, well-evidenced financial plan that demonstrates viability to creditors.

At Lowe CFO Advisory, we specialise in developing fully phased 3-way financial models that integrate P&L forecasts, cash flow projections, and balance sheet impacts. These models are designed not only to support the restructuring plan itself, but also to empower directors with clarity around their future financial trajectory.

Our services typically include:

• Detailed sales and margin analysis, segmented by product, customer, or channel

• Inventory purchasing and demand forecasting aligned to working capital availability

• Scenario planning, including best-case, base-case, and downside forecasts

• Board-ready presentation packs, with clean visuals and clear narratives for creditor briefings

• Custom dashboards and AI-assisted forecasting, where appropriate, for enhanced decision support

Early Action Delivers Strategic Advantage

Recent data shows that a growing number of small businesses are falling behind on tax obligations, with many unaware that the ATO can now issue Director Penalty Notices (DPNs) or report debts to credit agencies. In this environment, early engagement with financial and legal advisors is critical. Businesses that act pre-emptively can often negotiate with the ATO and other creditors on more favourable terms than those who delay action until formal enforcement begins.

Through our work with companies across retail, wholesale, import, and professional services, we consistently find that business viability is not the issue - visibility and planning are.

Lowe CFO Advisory: Your Strategic Partner in Restructure Execution

At Lowe CFO Advisory, we offer an end-to-end solution for directors considering a Small Business Restructure. As a CPA-qualified practice, we combine technical modelling capability with commercial acumen and clear, board-level communication.

Our restructuring support packages include:

• A tailored 3-way financial model (P&L, balance sheet, cash flow)

• A restructuring proposal document ready for SBRP or creditor use

• Clear board and creditor presentation materials

• Scenario analysis with creditor recovery outcomes

• Liaison with your appointed SBR Practitioner, legal advisors, or tax agent

We also provide optional guidance on the Small Business Restructure Rollover under ATO rules, helping you manage tax outcomes and ensure compliance throughout the restructure process.

Conclusion

A Small Business Restructure offers a powerful and under-utilised pathway for distressed businesses to regain control, preserve jobs, and rebuild stronger. With the right financial strategy and professional support, directors can avoid liquidation, meet creditor obligations, and position their businesses for long-term success.

If you are considering a restructure or simply want to explore your options, Lowe CFO Advisory can provide the clarity, structure, and strategic foresight needed to navigate this process with confidence.

Get in Touch

For a confidential discussion or to request a complimentary viability review, contact:

Benedict Lowe
Managing Partner | Lowe CFO Advisory
📧 benedict@lowecfoadvisory.com
🌐 www.lowecfoadvisory.com