Understanding how Small Business Restructuring (SBR) unfolds helps you prepare for each stage and maximise your chances of success. While every business situation differs slightly, the process follows a structured timeline that helps ensure the best possible outcome.
Many directors feel overwhelmed when first considering SBR, wondering how the process will affect their business and what each stage involves.
Let's walk through what happens at each stage, so you know exactly what to expect and how to prepare.
Before the process begins
Proper preparation plays a crucial role in successful restructuring. Think of this stage as laying the foundation for your business's transformation. The work you do before formally starting SBR often determines how smoothly the process will run and what outcomes you can achieve.
Most successful restructures start with thorough preparation. Your focus during this time should be on gathering information and ensuring you meet basic requirements. This preparation period helps you start the formal process with confidence and clarity about your situation.
Before appointing a Small Business Restructuring Practitioner, several important preparations need attention:
Confirm your eligibility
Gather financial information
Ensure employee entitlements are paid
Have tax lodgements substantially up to date
Consider your restructuring strategy
Week 1: Appointment and initial assessment
The first week of SBR sets crucial foundations for success. Think of it as the discovery phase, where your practitioner begins understanding your business while you maintain normal operations. This week brings significant changes, but also immediate benefits in terms of protection from creditor actions.
Day 1: Appointment
The moment you appoint your practitioner, important legal protections take effect. These protections create immediate breathing space, allowing you to focus on the restructuring process without constant creditor pressure. On this first day, several key changes occur:
Small Business Restructuring Practitioner appointed
Company remains under your control
Creditor actions are paused
Protection from personal guarantees begins
Days 2-5: Information gathering
With protection in place, your practitioner begins a thorough review of your situation. This intensive period helps establish a clear picture of your business's position and potential. Your practitioner will work closely with you to understand all aspects of your operations.
During these crucial days, expect detailed analysis of:
Practitioner reviews company information
Initial assessment of viability
Review of books and records
Financial position analysis begins
Days 6-7: Planning begins
As the first week draws to a close, focus shifts to strategic planning. Your practitioner will use insights gained from their initial review to begin mapping out potential restructuring approaches. This planning phase sets the direction for the following weeks of detailed work.
Key activities during these days include:
Initial discussions about restructuring options
Preliminary creditor analysis
Strategy development starts
Operational review commences
Weeks 2-3: Plan development
These crucial weeks focus on creating your restructuring proposal. This period often proves both challenging and exciting as you work with your practitioner to design a plan that can transform your company's future. The goal is to balance ambitious debt reduction targets with realistic payment proposals that creditors will accept.
Your practitioner brings valuable experience in crafting successful proposals, helping you understand what creditors typically accept and how to structure arrangements that work for all parties. This collaborative process helps ensure your proposal stands the best chance of approval.
Key activities
During this period, you'll work intensively with your practitioner on several fronts. Each element requires careful consideration to create a compelling proposal:
Working with your practitioner to develop the plan
Analysing sustainable debt levels
Reviewing business operations
Forecasting future performance
Determining proposed payment amounts
What the plan includes
Your restructuring proposal needs to address several key elements to gain creditor support. Think of this as your business's roadmap to recovery, showing creditors how you'll transform current challenges into future success:
Proposed debt reduction percentage
Payment timeline (usually 6-18 months)
Treatment of different creditor groups
Business improvement strategies
Financial forecasts and assumptions
Week 4: Plan finalisation
With your basic framework established, attention turns to finalising all necessary documentation. This week proves crucial in preparing a compelling case for creditors. Many directors find this week particularly intensive as every detail needs careful attention to ensure the proposal presents professionally and meets all requirements.
Your practitioner will guide you through this documentation phase, ensuring everything aligns with legal requirements while presenting your case effectively. This attention to detail helps build creditor confidence in your proposal.
Documentation preparation
Creating a professional, thorough proposal package requires several key documents. Each plays a specific role in helping creditors understand and evaluate your proposal:
Formal restructuring proposal
Supporting financial information
Declaration about company affairs
Practitioner's assessment report
Forecasts and assumptions
Final checks
Before submitting your proposal to creditors, thorough verification ensures everything meets requirements. This careful checking process helps prevent delays or complications that could affect creditor support:
Employee entitlements verification
Tax lodgement status review
Payment proposal feasibility check
Legal compliance confirmation
Week 5: Creditor consideration period
This week gives creditors time to review and consider your proposal. While it might feel like a waiting game, this period actually provides valuable opportunities to address questions and build support for your proposal. Many successful restructures use this time to actively engage with key creditors and address any concerns they raise.
Day 1: Plan distribution
The formal proposal distribution marks a significant milestone in your restructuring journey. Your practitioner handles this process professionally, ensuring all creditors receive complete information:
Proposal sent to all creditors
Supporting documents provided
Voting instructions included
Timeline for responses outlined
During this week
While creditors review your proposal, several important activities continue. Your practitioner plays a crucial role in managing this process and addressing any questions that arise:
Creditors review the proposal
Questions answered by practitioner
Additional information provided if needed
Voting preparations made
What creditors consider
Understanding how creditors evaluate proposals helps you appreciate their perspective. They typically look at several key factors when deciding how to vote:
Proposed debt reduction
Payment timeline
Alternative options (like liquidation)
Business viability assessment
Your track record as director
Week 6: Voting and decision
The culmination of all your preparation work arrives with creditor voting. While this week can feel tense, remember that good preparation and a realistic proposal significantly improve your chances of success. Your practitioner will guide you through this crucial period, helping manage the process professionally.
Creditor voting
The voting process follows strict guidelines to ensure fairness. Understanding how it works helps manage expectations:
Creditors submit their votes
Simple majority in value needed
All affected creditors can vote
Results tallied by practitioner
Possible outcomes
Two main scenarios can result from the voting process. Being prepared for either outcome helps you respond appropriately:
Plan accepted When creditors approve your proposal, several positive changes begin:
Move to implementation phase
Begin reduced payments
Continue trading normally
Regular monitoring begins
Plan rejected If creditors don't accept the proposal, you'll need to consider alternatives:
Consider alternative options
May need to explore other solutions
Time to reassess strategy
Seek professional advice
Implementation phase (months 2-18)
Successfully receiving creditor approval moves you into the implementation phase. This exciting period focuses on executing your plan while strengthening your business. Many companies find this phase particularly rewarding as they see their business transform and grow stronger.
If your plan is accepted
The implementation phase involves ongoing activities that help ensure success. Your practitioner continues providing valuable support throughout this period:
Regular payments as agreed
Monthly monitoring by practitioner
Continued business improvements
Regular creditor updates
Your ongoing responsibilities
Success during implementation requires maintaining several key commitments. Think of these as the foundations of your business's renewed strength:
Make all planned payments
Lodge tax returns on time
Pay new debts as they fall due
Maintain good records
Report any issues promptly
Business improvement focus
Use this period as an opportunity to strengthen your operations for the future. Many businesses find that improvements implemented during this phase create lasting benefits:
Implement operational changes
Strengthen financial controls
Improve cash flow management
Build stronger supplier relationships
Enhance customer service
Next steps to get started
If you're considering Small Business Restructuring, taking that first step often proves the hardest part. Many directors find that once they begin exploring their options, the path forward becomes clearer. We can help you understand the process and prepare effectively.
Contact our team for guidance on:
Understanding your options
Getting expert guidance
Planning your approach
Remember: Success in Small Business Restructuring comes from good preparation and committed implementation. The sooner you start planning, the better your chances of achieving a positive outcome that secures your business's future.
Read next: SBR debt reduction: What's possible for your company?
Previous: Small Business Restructuring eligibility: A simple way to check if you qualify
Or back to: Small Business Restructuring (SBR) Guide for Company Directors
