What happens if a company can’t keep up its small business restructuring plan?

If a company misses a payment or otherwise breaches its small business restructuring (SBR) plan, and the breach is not fixed within 30 business days, the plan terminates on the next business day. When a plan ends before it has been fully performed, the company does not get the release it would have received on completion. Any admissible debt not dealt with under the plan becomes due and payable on the next business day after termination, and creditors can pursue it again.

How an SBR plan ends

A restructuring plan terminates on whichever of these happens first:

The 30-business-day window

The 30 business days start on the day the breach occurs. That is roughly six weeks to fix it. Use the time:

• Tell the plan practitioner straight away. The practitioner receives the plan payments, holds them on trust and pays creditors. They need to know about a problem before the deadline, not after it.
• Work out whether the breach can be fixed. A missed instalment caused by a slow month is different from a business that can no longer support the payments.
• Understand that the plan can’t simply be renegotiated. Once a plan is made, it can only be varied by the court, on application by the company, an affected creditor, the plan practitioner or ASIC.
• Check the director position early. If the plan is likely to fail, the directors’ duty not to trade while insolvent, any personal guarantees and any director penalties need attention before termination.

Keep up with new tax obligations

The ATO expects a company in an SBR plan to meet all its new reporting and payment obligations in full and on time. It says that if a company fails to do so, it may take stronger enforcement action, even if the company is otherwise meeting its plan payments, and that failing to manage ongoing obligations may put the plan’s viability at risk.

Tax credits also affect the plan. Under the ATO’s offsetting rules:

• credits for periods before the restructuring are applied to pre-restructuring debts, even if those debts are later released under the plan
• credits arising during the plan are applied first to new liabilities, and any excess to pre-restructuring debts
• after a plan is completed, credits for later periods are generally refunded if no new liabilities remain.

What happens after a plan terminates

• Creditors can act again. While a plan is in force, a bound creditor can’t seek to wind up the company on an admissible debt, or start or continue recovery action, without the court’s permission. Once the plan terminates, that restriction ends.
• The unpaid debt returns. Admissible debts not dealt with under the plan become due and payable on the next business day after termination.
• Director penalties remain. The ATO says a director remains personally liable for any director penalty that was not remitted, although plan payments may have reduced it. See SBR and director penalty notices.
• A second SBR is generally not available. A company can’t use SBR if it has been under restructuring in the previous seven years.

If the business can still be saved, voluntary administration may give it another route to a deal with creditors. If it can’t, creditors’ voluntary liquidation closes the company in an orderly way. Talk to the plan practitioner or an independent adviser before termination to keep the most options open.

Completing the plan

An SBR plan must finish its payments on admissible debts within three years of the plan being made. When the company has met all its obligations and all admissible debts have been dealt with, the plan terminates and the company is released from those debts. It keeps any property it was not required to distribute. See what goes into an SBR plan.

Common questions

What happens if a company misses an SBR plan payment?

If the breach is not fixed within 30 business days of the day it occurs, the plan terminates on the next business day. Admissible debts not dealt with under the plan then become due and payable.

Can an SBR plan be varied if the company can’t keep up?

Once a plan is made, it can only be varied by the court. The company, an affected creditor, the plan practitioner or ASIC can apply.

What happens to the company’s debts if the plan fails?

Any admissible debt not dealt with under the plan becomes due and payable on the next business day after termination, and creditors can pursue it again.

Can the ATO take action while the company is in an SBR plan?

For new tax obligations, yes. The ATO says it may take stronger enforcement action if a company fails to meet its new reporting and payment obligations, even if it is otherwise meeting its plan payments.

How long can an SBR plan run?

Payments on admissible debts under the plan must be completed within three years of the plan being made.

Sources: Corporations Act 2001 (Cth) Part 5.3B; Corporations Regulations 2001 (Cth) regs 5.3B.15, 5.3B.31 and 5.3B.61; ASIC, Small business restructuring and the restructuring plan; ATO, Small business restructuring. This page is general information, not advice about your circumstances. Last reviewed: 16 October 2026.