When the Morrison government announced the introduction of a Small Business Restructuring Plan (SBRP) in late 2020, it was designed around key features from Chapter 11 of the Bankruptcy Code in the United States.
Far from being a negative development, an SBRP is actually a way to help small businesses restructure and survive, particularly following the economic impact of COVID-19.
“The benefit of a Small Business Restructuring Plan is that it forces you to think into the future,” said Peter Rechniewski, a small business owner who went through the SBRP process.
“It really clears your head when you think about what you have to do. I had to tell the ATO what my business plan was. It’s also enabled me to focus on growing my business.”
Insolvency practitioner Jirsch Sutherland believed that when used correctly, SBRPs should act like a pressure release valve for businesses that have been largely impacted by factors outside of the directors’ control.
“It can also help correct a business’s footing after being blindsided by some financial shock, such as significant bad debt, trading restriction or supply chain disruption.
“Anyone considering a payment plan with the ATO should also be considering whether a SBR Plan would be more appropriate to protect the long-term interests of the business and its stakeholders,” the group said.
Jirsch Sutherland has outlined seven benefits of SBRPs.