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Start the conversation – Small Business Restructuring

17th February, 2021

Start the conversation – Small Business Restructuring

Small Business Restructuring has been available for Australian businesses since 1 January 2021 and in mid-February 2021 we are seeing a slow but increasing, uptake in adopting the procedure.

The Small Business Restructuring procedure is not suitable for all businesses, given the strict qualifying criteria, and is best suited to businesses with a profitable past that have been de-railed by a one-off event such as COVID-19.

In our view, the key to a successful restructuring will be to initiate the procedure early enough when relationships with creditors are not too broken and success can be easily achieved.

Determining if, or when, a company should enter a small business restructuring starts with a conversation and risk assessment with an experienced registered liquidator. 

We recommend starting the conversation when the following warning signs present themselves:

  • You are one BAS late and have no clear understanding of how it will be brought up to date before the next BAS is due.
  • You have not made a profit for the past 12 months, despite the Government stimulus.
  • You have no clear understanding of how arrears to your landlord will be made up in the time frame that has been committed to (if one has been).
  • An increasing number of trade creditors are pressing for payment and you don’t have the current resources to meet all commitments that will need to be made.

A conversation, starting with how the above problems can be addressed and evaluating formal and informal restructuring options is highly recommended for businesses that have been de-railed by a one-off event and have recognised the problems before they are too deep.  

Call us on (08) 7089 0011 if you have any questions on how a Small Business Restructuring could work for you.

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