What is the big picture for small business restructuring?

ASIC has published its second Review of Small Business Restructuring (SBR) process (2022 – 2024)

The highlights include the well documented significant increase in the number of SBR appointments from 82 to 3,388, 79% transitioned to a plan, resulting in a median dividend of 20c in the dollar. 87% of dividends ($88M) went to the ATO. In essence SBRs are working as intended.

Debate continues about whether unprofitable companies should be allowed to continue where there has been no underlying change in the circumstances leading to their insolvency, especially with their ‘unfair advantage’ of not paying their taxes in full like profitable business must. On the other hand, 20 cents in the dollar is significantly more that the ATO’s return from the alternative (court liquidation) which is close to zero.

This debate is unlikely to be resolved unless the long called for comprehensive review of insolvency laws ever takes place.