21 Sep Restructuring an Aquarium Retailer with a $309,000 ATO Debt
Capability: Restructuring & Turnaround
Industry: Retail
Appointment: Small Business Restructuring (SBR)
Overview
The business operates an aquarium and related supplies business through both an online store and a physical showroom. In 2023 it faced financial and operational difficulties that affected its ability to keep up with its statutory liabilities to the ATO. These were driven by the COVID-19 pandemic, redevelopment costs, higher wages, reduced sales and weaker consumer spending as interest rates rose.
Challenges
- About $309,000 owed to the ATO and about $27,000 owed to unsecured creditors
- Rising redevelopment costs and increased wage expenses placed further pressure on cash flow
- The director was managing both the business renovations and family caregiving responsibilities during this period
- Losses of about $167,000 in the 2023 financial year and about $200,000 in the 2024 financial year
- Related parties agreed to write off about $500,000 in loans
What is small business restructuring?
Small business restructuring lets an eligible company keep trading under the control of its directors while it proposes a plan to pay creditors part of what they are owed. If creditors accept the plan and the company completes it, the balance of the admitted debts is released. The ATO explains its approach to small business restructuring, and ASIC sets out small business restructuring and the restructuring plan for directors.
Greengate Advisory’s approach
We reviewed the company’s position and worked with the director on a restructuring plan combining an upfront payment with monthly contributions the business could sustain, then put that plan to creditors.
The restructuring plan
- An upfront payment of $15,000
- $5,100 a month for 12 months
Outcome
- Debt reduced from about $336,000 to $76,200, a reduction of about 77 per cent
How Greengate Advisory can help
If your retail business is carrying an ATO debt it cannot clear from current trading, small business restructuring may be an option. Outcomes depend on the circumstances of each business and on creditors accepting the plan. Read our small business restructuring guide or contact us for a confidential discussion. We can explain the options in English, Mandarin or Korean.
