Could Your Business Reduce Its Debt by 60-70%?

A general overview of small business restructuring data, ATO participation and the timing questions directors may need to organise.

Could Your Business Reduce Its Debt by 60-70%?

Last updated 18 July 2026

The median small business that completed a formal restructuring plan, with the right support, reduced the debt it had to pay by approximately 60-70%.

For a business owing $350,000 in unsecured debt, that could mean settling for around $105,000 to $140,000, with the remaining balance released.

That reflects what is currently being seen in the market. ASIC’s 2024 review of small business restructuring (Report 810), which analysed 3,388 restructuring appointments and over 1,260 finalised plans, remains useful context.

Not every business will qualify, and outcomes depend on your creditors and your specific situation.

But the data suggests that exploring formal restructuring could be a genuine path to reducing your overwhelming debt.

What is small business restructuring?

Since January 2021, Australia’s insolvency framework has included a small business restructuring (SBR) process designed specifically for eligible small businesses.

Unlike traditional insolvency processes, such as voluntary administration or liquidation, the SBR process allows directors to stay in control of their company.

An independent restructuring practitioner is appointed to help develop a plan, but the directors continue to run the business day to day. The plan proposes a dividend to creditors, typically a portion of what is owed, and creditors vote on whether they accept it.

If the plan is approved and fulfilled, the remaining debts covered by the plan are released. It’s not a magic fix, and it’s not available to every business. For those that qualify, it can offer a structured way to deal with debt that might otherwise feel impossible to manage.

The ATO is usually the biggest creditor, and they’re accepting these plans

One of the most striking findings in the ASIC report is the role of the Australian Taxation Office in the SBR process.

The ATO was listed as a creditor in at least 93% of companies where a restructuring plan was fulfilled.

Of the $101 million returned to unsecured creditors through completed plans, approximately $88 million, or 87%, went to the ATO.

If your business is carrying a significant ATO debt, whether from overdue BAS, PAYG, superannuation guarantee, or income tax, this is worth paying attention to.

The data suggests the ATO is actively participating in and accepting restructuring plans in an effort to help small businesses where it makes sense.

That does not guarantee the ATO will accept a plan for your business. Every situation is different, and creditor approval is never certain, but the trend in the data is very clear.

If your business is struggling with ATO debt and you’d like to explore your options, you can request a free business strategy assessment with us here.

What the numbers actually show

ASIC’s report covers 3,388 small business restructuring appointments between July 2022 and December 2024.

Here’s what the data tells us about outcomes for businesses that completed the process:

  • The current average dividend rate is around 30 to 40 cents in the dollar, meaning creditors typically accept around 30% to 40% of what they are owed
  • 59% of completed plans paid dividends of between 15 and 25 cents in the dollar
  • 87% of proposed plans sent to creditors were approved
  • 93% of businesses that fulfilled a restructuring plan remained registered and trading
  • The median value of unsecured creditor claims was $359,082, with around 75% of companies owing creditors less than $600,000
  • The median cost of the entire restructuring process was $21,998, which includes both the restructuring appointment and the plan phase

We believe these figures paint an encouraging picture for small business owners who are struggling under the weight of debt they can’t realistically repay in full.

Who can access this process?

The SBR process is designed for small businesses, and there are specific eligibility criteria. While the full requirements are detailed in the Corporations Act, the key conditions include:

  • Total liabilities must not exceed $1 million (unsecured creditors)
  • The company must not have used the SBR process, or been subject to a simplified liquidation, within the preceding seven years
  • Employee entitlements must be up to date
  • Tax reporting obligations must be up to date (though the tax debt itself can be included in the plan)

The industries making the most use of the process reflect where small business financial stress is most common.

Construction accounts for 27% of all SBR appointments, and accommodation and food services for 23%.

If you’re unsure whether your business might be eligible, a confidential conversation with a business recovery professional can help you understand your options.

The first conversation is always at no cost.

If this is of interest, you can request a free business strategy assessment here.

What happens if a plan is approved?

Once creditors approve a restructuring plan, the business makes the agreed payments over the plan period, which can be up to three years.

During this time, the directors remain in control and the business continues to trade.

When the plan is fulfilled, all admissible debts and claims subject to the plan are released. The business moves forward without the burden of the original debt.

ASIC’s data shows this is working. Of the 1,161 plans that were finalised and fulfilled by March 2025, approximately 93% of those companies remained registered at the end of April 2025.

Two years after plan commencement, only 6% of plans had been terminated, with 75% fulfilled and 19% still ongoing.

The alternative is usually worse

For many business owners, the instinct is to keep going, get your head down, and hope that things will improve. But in our experience, that is rarely the case.

Carrying unmanageable debt often has a compounding effect. Interest and penalties grow as suppliers tighten their terms, and then cash flow tightens further, and the stress becomes constant.

The alternative to a structured restructuring is often an unstructured one: voluntary administration, liquidation, or creditors forcing the issue for you.

Those outcomes typically cost more, return less to creditors, and almost always mean the business doesn’t survive.

At a median cost of $21,998 for the entire restructuring process, the SBR pathway is significantly more affordable than most directors expect, and a fraction of what traditional insolvency processes typically cost.

Where to from here

If your business is carrying debt that feels unmanageable, particularly ATO debt, it may be worth exploring whether small business restructuring could be an option.

Business Recovery Helpline offers free, confidential business strategy assessments designed for exactly this situation, with no obligation.

There’s no sales pitch, and absolutely no judgement.

It’s a structured conversation with an experienced business recovery professional who can help you understand your position and your options.

You can request a free session by answering a few quick questions on our assessment page:

Request your free business strategy assessment →

This article is for general information only and does not constitute legal or financial advice. Eligibility for small business restructuring depends on individual circumstances, and outcomes are subject to creditor approval. If you require advice specific to your circumstances, please consult a qualified legal or financial professional.

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