iscoverSmall business restructuring appointments have surged as awareness of the scheme grows, but the approval rate of SBR plans is starting to decline.
Firms provide tips for SBR success as approval rates decline
04 August 2025
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8 minute read
ASIC data has shown that SBR appointments have surged in recent years, from 448 appointments in 2022–23 to an estimated 3,000 in 2024-25.
An ASIC review revealed that 87 per cent of restructuring plans were approved by creditors. However, this number has begun to decline: 79 per cent of SBRs were approved in the 2024–25 financial year, compared to 88 per cent the year prior.
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The ATO’s vote is often a deciding factor in the success of SBR proposals, accounting firm BDO said. ASIC found that 87 per cent of total SBR funds were distributed to the ATO.
“While it’s no surprise the ATO is a major creditor in the majority of SBRs, this statistic highlights just how crucial the ATO’s vote is,” BDO wrote.
“For an SBR proposal to be accepted, more than 50 per cent in value of creditors who vote must accept the proposal. You could therefore draw the inference that the ATO controls the vote in the vast majority of SBRs.”
Given that the ATO was a key stakeholder in the success of most SBR proposals, BDO urged businesses seeking to initiate an SBR process to ensure that their ATO lodgements were up to date.
“Chronic late lodgers are unlikely to receive support from the ATO,” BDO noted.
It added that any director loans should be repaid before the commencement of an SBR.
“The ATO takes a dim view of directors who have extracted cash from the business via a loan, in circumstances where tax obligations have not been met,” it said.
As the rate of SBR rejections rose, BDO said that the proposed return to creditors could be a determining factor in a scheme’s success. The average return to creditors from a successful SBR scheme was 21 cents to the dollar.
As the rate of SBR rejections rises, BDO said that an above-average return could increase a proposal’s chance of getting approved.
Crucially, BDO said that for an SBR to be approved, it must be possible to turn around the performance of a business.
“There is little benefit in going through an SBR process if the business continues to be loss making. Directors need to ensure that the business can trade profitably post-completion of the SBR,” it said.
Accounting firm RSM also urged firms considering an SBR to be vigilant when selecting practitioners. As SBR rates have surged, some businesses have moved in to capitalise on the trend with little regard for a business’s viability.
“Some firms have been engaging in sharp business practices by offering services at rates significantly above current market levels, providing finance to directors at high rates of interest or promoting restructures that have little chance of success,” RSM warned.
“This predatory pricing often targets financially distressed businesses, taking advantage of their vulnerability during critical times.”
Hank de Jonge, executive director of business restructuring firm de Jonge Read, added that SBRs were not always the right call for distressed businesses.
“We are seeing clients coming to see us who have gone into SBRs recommended through other advisors and are now saying, 'we can't afford it'", he said.
“I think what’s happened with SBRs is that they were definitely the ‘flavour’ of the month. I think when the SBR started, the ATO were quite relaxed and what's happened over the last 18 months or two years, is that they have certainly become more stringent and closely monitored, which is good, especially in terms of cash flow.
“There are lots of good things with SBRs, but they're not the answer for every situation.”
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