Small Business Restructuring Practitioner

A small business restructuring practitioner is the registered liquidator who assesses whether your company qualifies for small business restructuring (SBR) and helps prepare the restructuring plan, while directors stay in control of the business throughout. Before you get too far into the process, it’s worth understanding exactly what the practitioner is checking — the eligibility test is more specific than most directors expect, and it catches people out in ways a quick Google search doesn’t always make clear. Debt Negotiators helps directors across Australia work through these tests before committing to anything.

What is a small business restructuring practitioner?

A small business restructuring practitioner is a registered liquidator appointed to assess your company’s eligibility, help develop a restructuring plan, and declare to creditors whether that plan is realistic. Only someone registered with ASIC as a registered liquidator can act in this role — no other adviser, however experienced, can take the appointment.

The practitioner doesn’t take control of the business. Directors keep running day-to-day operations, and the practitioner acts as the company’s agent, advising on the plan rather than managing the company itself.

Is my business eligible for small business restructuring?

Eligibility is assessed against several tests at once, all measured on the day the restructuring practitioner is appointed — not at some earlier point when you first started looking into it. Total liabilities must be under $1 million, the company must be insolvent or likely to become insolvent, and no director can have been involved with SBR or simplified liquidation at another company in the past 7 years.

One of the biggest misunderstandings we see is around the $1 million test. It isn’t simply “our business has less than $1 million in debt.” The test is based on the company’s admissible liabilities as at the date the practitioner is appointed, and there are other eligibility tests running alongside it — so a business can genuinely believe it qualifies and be wrong on both counts.

What actually counts toward the $1 million test?

“Admissible debt or claim” is a defined legal term, not just a general sense of what your business owes. It means a debt or claim that would be admissible to proof against the company if the company were wound up — and a few categories are explicitly excluded from that figure.

What counts as an admissible debt

Because the test is specific, two businesses with what looks like the same total debt on paper can land on different sides of the $1 million line once the admissible-debt calculation is actually done.

What other eligibility tests does a practitioner check?

Beyond the debt threshold, the practitioner also checks whether employee entitlements that are currently due have been paid, and whether required tax returns, notices and statements have actually been lodged — even if the tax itself hasn’t been paid yet. If a company hasn’t substantially met both of these before a plan is proposed to creditors, it can’t go ahead.

The 7-year history test applies to directors, not just the company: if you’ve been a director of another company that used SBR or simplified liquidation in the past 7 years, that can affect your current company’s eligibility too, with limited exceptions for related bodies corporate.

How much does small business restructuring cost?

Directors and the practitioner agree a flat fee before the process starts, determined by board resolution on or before the day the practitioner is appointed. Real numbers give a useful benchmark: ASIC’s review of the scheme found the median practitioner remuneration was $21,998 across the plans it reviewed.

What a plan is likely to cost your specific business depends on the complexity of your debts and how many creditors are involved, so treat that figure as a benchmark rather than a quote.

What happens during the restructuring process?

Once appointed, the practitioner and directors have a proposal period of 20 business days to prepare and execute a restructuring plan, extendable by up to 10 more business days. Creditors then get 15 business days to review the plan and vote — it’s accepted if a majority in value of the creditors who respond support it.

If accepted, the company makes the agreed payments and, once every obligation under the plan is met, is released from the admissible debts it covered. For the broader picture of what SBR involves, see our main small business restructuring (SBR) overview, or compare it against the alternatives in small business restructuring vs liquidation vs DOCA.

Can a sole trader do a small business restructure?

No — SBR only applies to companies, not unincorporated businesses or individuals. A sole trader carrying business debt they can’t manage has a different set of options available, generally through personal insolvency arrangements rather than a company restructuring plan.

What does Debt Negotiators do if I’m considering SBR?

Debt Negotiators can help directors understand whether small business restructuring may be worth exploring based on their financial position — working through the eligibility tests above against your company’s actual numbers, before you commit to appointing a practitioner. Since only a registered liquidator can act as the restructuring practitioner itself, that formal appointment sits outside what any adviser who isn’t a registered liquidator can do.

Getting a clear read on where you stand against the eligibility tests first means you’re not finding out three weeks into the process that the numbers don’t work.