Small business restructuring: a guide for creditors
If a company that owes you money appoints a small business restructuring practitioner, you can’t start, continue or enforce a claim against it while the restructuring is under way, without the practitioner’s consent or the court’s permission. The directors usually have 20 business days to prepare a plan. The practitioner then sends it to you and asks whether it should be accepted. The plan is accepted if a majority in value of the creditors who respond support it, and if it is accepted, it binds you for your admissible debt.
How to tell a company is in SBR
- The company’s public documents, such as invoices and letters, must show the words ‘restructuring practitioner appointed’ after its name.
- On ASIC’s companies register, the company’s status changes from registered (REGD) to external administration (EXAD). It changes back to registered once a plan is made.
- You will usually receive a notice from the restructuring practitioner.
What you can and can’t do during the restructuring
| If you are… | During the restructuring |
|---|---|
| An unsecured creditor | You can’t begin, continue or enforce a claim against the company without the practitioner’s consent or the court’s permission. |
| A creditor that has applied to wind up the company | The court must adjourn the hearing if continuing the restructuring is in the company’s interests. |
| A secured creditor, owner or lessor | You can’t enforce your rights over property the company uses without the practitioner’s written consent or the court’s permission. |
| Holding a director’s personal guarantee | You can’t enforce a guarantee given by a director, or a director’s spouse or relative, without the court’s permission. This ends when the plan is made or the restructuring ends. |
The directors stay in control of the business and keep trading. Payments of debts owed at the start of the restructuring need the practitioner’s consent, so you should not expect to be paid old invoices outside the plan.
What you will receive
- The restructuring plan, which says how much the company will pay and when
- the standard terms that apply to every plan
- the restructuring proposal statement, which includes a schedule of debts and claims listing what the company says it owes each creditor
- the practitioner’s declaration, which covers whether the company is eligible, whether it is likely to be able to meet the plan, and whether the proposal statement is complete. It must also disclose any affected creditor related to the practitioner.
Check your debt in the schedule
In SBR you don’t usually lodge a formal proof of debt. Instead, check the amount the directors have listed for you in the schedule of debts and claims. If you agree, confirm it. If you disagree, tell the practitioner, following the process the practitioner sets out. The practitioner resolves disputes about the amount of a creditor’s claim. The voting period can be longer where creditors dispute the schedule.
How the vote works
| Voting rule | Detail |
|---|---|
| Who votes | Affected creditors: creditors with admissible debts or claims who would be party to the plan |
| Who can’t vote | The practitioner, creditors who were related to the company when the restructuring began, and creditors who are related entities of the practitioner |
| How you vote | A written statement to the practitioner saying whether the plan should be accepted |
| Deadline | Generally 15 business days from when the plan documents are given to you |
| Threshold | A majority in value of the affected creditors who return a statement |
| If you don’t respond | Your debt is not counted in the vote |
Received an SBR plan and not sure how to vote?
We can talk you through the plan, the schedule of debts and what the alternative would likely return. Book a free 30-minute call with Luke D’Costa, Senior Manager – Debt Strategist.
Book a free 30-minute call Sydney 02 9660 3532 · Brisbane 07 3868 1888
What to consider before you vote
- The amount and the timing. How much of your debt the plan pays, in instalments or a lump sum, and when. Payments must be completed within three years.
- The alternative. If the plan is rejected, the restructuring ends. If the company then goes into liquidation, what would unsecured creditors likely receive? Ask the practitioner.
- Equal treatment. All admissible debts rank equally under a plan. No creditor or class of creditors gets priority.
- The ongoing relationship. If the company is a customer you want to keep, an accepted plan means it keeps trading.
- Your other rights. If you hold security or a director’s guarantee, check how the plan affects them before voting.
For examples of what creditors have received in practice, see what creditors actually receive in a small business restructuring.
Secured creditors, owners and lessors
- If your security is worth less than your debt, you are bound by the plan only for the shortfall.
- If your security is worth at least the amount of your debt, you are bound only if you consent.
- A plan does not stop you enforcing your security, unless you accepted the plan and it prevents this, or the court orders otherwise.
- Owners and lessors (other than retention-of-title suppliers under the PPSA) keep their property rights, unless they accepted the plan and it affects those rights, or the court orders otherwise.
After the vote
| If the plan is… | What happens |
|---|---|
| Accepted | The plan is made the day after the voting period ends, or when a specified condition is met. It binds you for your admissible debt. While it is in force, you can’t seek to wind up the company or recover that debt without the court’s permission. The plan practitioner receives the company’s payments and pays creditors. |
| Completed | The company is released from its admissible debts. |
| Terminated before completion | Any admissible debt not dealt with under the plan becomes due and payable on the next business day after termination. |
| Not accepted | The proposal lapses and the restructuring ends. You can resume recovery action. |
Common questions
Do I need to lodge a proof of debt in small business restructuring?
Not usually. Your debt is listed in the schedule of debts and claims in the restructuring proposal statement. You verify it, or tell the practitioner if you disagree.
How long do creditors have to vote on an SBR plan?
Generally 15 business days from when the plan documents are given to them. The period can be longer if creditors dispute the schedule of debts and claims.
How is an SBR plan accepted?
By a majority in value of the affected creditors who return a written statement. Creditors who don’t respond are not counted.
Can related creditors vote on an SBR plan?
No. Creditors who were related to the company when the restructuring began, the practitioner, and related entities of the practitioner are excluded.
Can I chase a debt while the company is in SBR?
Not without the practitioner’s consent or the court’s permission while the restructuring is under way. If a plan is made, you need the court’s permission to recover an admissible debt while the plan is in force.
What happens to my debt if the plan fails?
If the plan terminates before it is completed, any admissible debt not dealt with under the plan becomes due and payable on the next business day after termination.
Sources: Corporations Act 2001 (Cth) Part 5.3B; Corporations Regulations 2001 (Cth) regs 5.3B.22 and 5.3B.25; ASIC, Small business restructuring and the restructuring plan. This page is general information, not advice about your circumstances. Last reviewed: 16 October 2026.
Written by John Chand, Principal and Registered Liquidator. John has more than 17 years’ insolvency experience. Meet the team.
