iscoverSmall business restructures have become a popular strategy for SMEs facing insolvency, but restructuring experts believe they’re sometimes not as effective as portrayed.
Small business restructures: smart solution or ‘flavour of the month’?
16 July 2025
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9 minute read
Recently released data from ASIC outlines that the uptake of small business restructuring (SBR) appointments has significantly increased in 2024–25, with an overall positive sentiment and benefit.
An SBR process is the first external administrator appointment where directors are able to keep control of an insolvent company, rather than the appointed registered liquidator.
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ASIC said that it had released the 756 review of the small business restructuring process (REP 756) in 2022 and an updated SBR plan template in December 2024 – both of which caused a significant increase in the uptake of SBRs and SBR plans.
“The number of appointments has increased significantly since we published REP 756. There were 448 appointments in 2022–23 compared to 1,425 in 2023–24, with the number of appointments for 2024–25 anticipated to be around 3,000,” the corporate regulator said.
Despite the significant uptake in SBRs, business restructuring experts have warned it could be more of a trend rather than a worthwhile and effective solution for business owners facing financial distress.
Hank de Jonge, expert in business restructuring and pre-insolvency strategy, said he supported the process of SBRs, but only recommended them to clients if it was viable and affordable in the long term.
“We like SBRs and we’ve been involved in lots of SBRs and getting those across the line, but we don’t push them unless the numbers stack up. Our strategic approach ensures SBRs are a tool, not a shortcut, backed by clear viability and long-term planning.”
“What we do tend to see though is clients who have come to see us and said “we want out of this, we can’t afford it”. So, I think what’s happened is, SBRs were definitely the flavour of the month.”
“They were certainly initially pushed very hard with clients, without taking into consideration if the client can afford the payments.”
On the other hand, the Grant Thornton restructuring advisory team said the ASIC report reinforced that the SBR process was “making a real difference for Australian businesses doing it tough”.
According to the accounting firm, its restructuring team had played a “key role” in supporting clients through the SBR process and had assisted many clients in successfully reducing debt and keeping their business running.
John McInerney, Grant Thornton restructuring advisory partner, said an important feature of SBR success was the directors remaining in control during the SBR process while working with the restructuring practitioner to develop a debt compromise plan.
“We’ve had a run of success helping clients restructure and keep their businesses running. One hospitality client was downsized from four cafés to three after the COVID period. By taking them through the SBR, we saved 70 jobs, restructured legacy debt, and now they have expanded and have six cafés highlighting the benefits of the SBR process,” McInerney said.
“We continue to advocate for practical, forward-looking solutions that help Australian small (and some medium) businesses navigate financial distress and emerge stronger.”
Grant Thornton noted that the key factors involved in the success of the SBR process were assessing the underlying viability of the business, preparing a robust six- to 12-month cash flow forecast and keeping up to date with tax reporting obligations.
De Jonge said if a small business had failed an SBR or found it ineffective, it could usually be linked back to a lack of cash flow, which should have been initially checked.
“There’s nothing wrong with going into an SBR, as long as the cash flow has been done, and hand on heart, we’re comfortable that the business can afford the payments.”
“If an SBR is not affordable, there are different options. One of them would be a sale to a related entity, but sometimes we get clients who just simply want to go home, or they’re looking at the business and it isn’t sustainable, so maybe it needs to be what we call a controlled exit.”
“A controlled exit of a business is basically selling the business or shutting it down in a controlled manner to get the best result for creditors, get the best results for stakeholders and so on.”
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