Corporate insolvency
Small business restructuring and tax implications
31 Aug 2023
Directors who want to try to save their business may choose to restructure company debt while retaining control of business operations and creditor relationships.
Business Turnaround & Restructuring
Small business restructuring
A lower-cost solution to restructure small business debt
COVID-19 created a tough economic environment for many small businesses and the government made changes to allow directors to restructure debt more easily and with less expense to weather the storm—while staying in control of the business.
Background
Directors need certainty
We thought we’d seen everything since starting our business in 2008. COVID changed the game forever when work massively declined but equipment leases and other overhead costs remained. Then a perfect storm of factors pushed us to the point of insolvency and it looked like a company wind up would be the only option. The Small Business Restructuring process saved us, saved our employees’ jobs, and saved our business. We are extremely grateful for everyone’s contribution at Worrells and our accountant to structuring our restructuring plan and negotiating with our creditors. Great work team!
WADE WATSON
WATSON INDUSTRIES PTY LTD T/AS PRO COMMS AUSTRALIA
Service highlights
It's do-able to undo, with insolvency experts
Business can be tough. Before you throw in the towel, we help you consider what can be done to turn a business around, exploring restructuring options that can buy you valuable time to get back on your feet.
Space to breathe
There's two phases in the restructuring process. In the first phase, where the plan for creditors is being worked on, directors can get the space needed in the comfort of knowing that creditors are aware that a plan is underway.
Retain control
Directors retain control of business operations. A registered small business restructuring practitioner, is there to support and guide the restructuring process and handle the creditor processes.
Quick pathway to certainty
With creditor approval, the small business restructuring process takes 35 business days or less.
Shortened turnaround
Due to simplified design, small business restructuring takes less time than other formal insolvency processes.
Increased & easier access
Because of reduced costs and turnaround times, more small businesses can readily access this solution.
Reduced costs
Due to simplified design, small business restructuring is significantly less costly than a voluntary administration.
Download
Small Business Restructuring guide
Get our Guide to Small Business Restructuring to get the overview of how the whole process works, which is also outlined in a 35 business day step-by-step flowchart.
COVID-impacted hospitality business
Thriving, not just surviving
Prior to the COVID-19 pandemic, the business owners ran a thriving café. The Victorian government-imposed restrictions throughout 2020 and 2021 materially impacted the business’s turnover and profitability. The business owners pivoted the business as best they could—they catered for take-away-only service, increased their reliance on food delivery platforms, and leveraged government support. However, sales reduced, cost of goods increased, and staff wage pressures strained the cash flow and meant the business was facing insolvency.
The business owners were referred to our team, eager to find a way to save the business.
Summary
Established café
COVID-19 impacted | Main debt owed to the ATO
Outcome
An agreed 75% reduction on debts
Resources
We're knowledge sharers
Get the latest insights and news on small business restructuring
Business turnaround
Small business restructuring: a simplified safe harbour plan for SMEs
01 May 2023
Business turnaround
ASIC’s review of small business restructuring: key insights
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Restructuring
Two cases of small business restructuring success, including a group of companies
02 Apr 2023
How we help
Difficult business or personal financial situations
We operate as specialists in a unique sector, dealing with bad debts and distressed businesses and personal finances. We have the tools and framework to lead all parties through choppy seas. Tough situations often mean honest conversations and we will never shy away from the straight talk that insolvency demands.
We're here to help
We speak with people and their advisors every day. We do this as complimentary and without expectation.
Jason Bettles
Principal, Gold Coast, Northern NSW
Jason Bettles
Principal, Gold Coast, Northern NSW
Aaron Lucan
Principal, Western Sydney, Central West
Aaron Lucan
Principal, Western Sydney, Central West
Stephen Hundy
Principal, Canberra, Wollongong
Stephen Hundy
Principal, Canberra, Wollongong
Matthew Kucianski
Principal, Melbourne, Ringwood
Matthew Kucianski
Principal, Melbourne, Ringwood
Mervyn Kitay
Principal, Perth
Mervyn Kitay
Principal, Perth