2024 Year end tax planning and financial reporting guide - unlocking tax and reporting insights for year end success > Download the full guide
Australia’s Small Business Restructuring regime: a tool to revive your manufacturing business
3 October 2023 | Minutes to read: 2

Australia’s Small Business Restructuring regime: a tool to revive your manufacturing business

By Garth O'Connor-Price

In times of economic uncertainty, SME businesses are generally squeezed harder than larger ones, with fewer levers to help them navigate financial distress.

This is particularly relevant for manufacturing businesses, which have faced headwinds in recent times caused by high inflation, increasing interest rates, supply chain issues and challenges sourcing skilled people.

This uneven playing field was improved with the introduction of the Small Business Restructuring (SBR) regime in 2021. SBR is a tool exclusively available to SME businesses to restructure their affairs, break the cycle of funding historical losses and set themselves up for future profitability.


To be eligible for the small business restructuring regime, a company must have:

  • Liabilities of less than $1m
  • No outstanding employee entitlements (i.e., superannuation), and
  • Lodged and returned all outstanding lodgments to the ATO.

It is also worth noting that a director can only use the SBR regime once every seven years.



A manufacturing business in distress is likely to have an escalation of trade and statutory creditors as declining performance requires that creditors are pushed out. However, it is also likely that the business may have equity locked up in equipment which could be used to address the build up of creditors. Below is an example of how this might work:

Manufacturing SBR Example $
Available Working Capital 50
less: SBR Costs (20)
Residual Working Capital 30
add: SBR Contribution (Unlocked Equipment Equity) 100
Creditor Dividend Pool 130
Creditors 500
Dividend Rate 26%
Net Asset Position Pre SBR (300)
Reduction in Creditors 500
Reduction in Working Capital (50)
Increase in Non-Current Debt (100)
Net Asset Position Post SBR 50
Improvement in Net Asset Position 350

The above outlines the potential upside to a manufacturing business of creating a restructuring plan with its creditors. Factoring in current working capital and costs, unlocking $100k in equity to fund the SBR contribution could lead to an improvement in the company balance sheet of $350k. This result is based on the secured creditor increasing the company’s facilities with preservation of their security (i.e., plant and equipment) and unsecured creditors accepting a dividend of 26c on the dollar for their claims.

This result is likely to be a better one for all creditors than liquidation. If the company ceases to trade, employee entitlements will crystalise and the value of the plant and equipment would decrease, reducing the equity available to pay creditors.

The SBR contribution can be generated in several ways including a third-party injection of funds or future trading profits.


As noted above, the SBR is exclusively available to SME businesses. The alternative for larger distressed businesses or those that don’t meet the eligibility criteria for the SBR regime include a formal restructure through a Voluntary Administration or an informal restructure under Safe Harbour. Below, you’ll find articles with further information on these options.

How and when your business should access Australia’s safe harbour provisions

Business rehabilitation through Voluntary Administration

Please contact your local William Buck Restructuring and Insolvency advisor for further information.

Australia’s Small Business Restructuring regime: a tool to revive your manufacturing business

Garth O'Connor-Price

Garth is a Director in our Restructuring & Insolvency division. Garth specialises in SME distressed situations and draws on his experience to tailor solutions to client distress including voluntary administration, strategic restructuring advice, liquidation and safe harbour protection. He is a Chartered Accountant and holds ARITA’s Advanced Certifications in Insolvency and Restructuring & Turnaround.

Read more >
Related Insights
  • Back to Insights
  • Australia’s Small Business Restructuring regime: a tool to revive your manufacturing business
  • 2 min read