The small corporate business ‘restructuring’ process under Part 5.3B of the Corporations Act was introduced in 2021, in some criticized haste, consistent with the stated need to address potential high rates of insolvencies during the COVID-19 crisis. Numbers of companies accessing SBR have increased, well past the ending of COVID, although no doubt with legacy debt and insolvent trading involved. Any broader review of SBR might assess how it sits with the government’s current productivity and competition focus.
ASIC has just issued its second report on the operation of SBR, within the confines of the regime’s intended operation, explaining what are said to be the “saving of businesses”, by way of writing off their long unpaid debt, with creditor agreement. Review of small business restructuring process: 2022–24, Report 810, June 2025.
ASIC explains that most companies where a restructuring plan was fulfilled have remained registered, perhaps consistent with the fact that any business with say 80% of its tax debt forgiven should still be operating.
However, the report notes criticism that
“the regime may not address the root cause of financial distress and instead allows a company to face similar financial issues in the future”.
This does mean that “in competition terms, an inefficient business with large tax debts may offload that debt and resume trading among its competitors”, inconsistent with competition policy: see my The interaction of insolvency law and market competition (2025) 23(9&10) INSLB 75.
Any focus of SBR on “increased productivity and innovation” seems to be confined simply to “reducing the complexity and costs involved in insolvency processes … and ultimately helping small businesses to survive”: Corporations Amendment (Corporate Insolvency Reforms) Bill 2020.
In what is now in 2025 a different economic environment with a focus on economic productivity and market competition, the place of Part 5.3B might be questionable. It was intended that its position remain under review.
That review might usefully assess whether SBR remains consistent with the government’s focus on promoting those businesses whose levels of productivity, innovation and efficiency, and tax compliance are such that they do not need to access the SBR process.
And as the Minister for Small Business explains, most small businesses operate as unincorporated structures, where there has been no comparable law reform for individuals. In ASIC’s report, whether directors survive their personal liabilities is not shown.
The lack of insolvency law reform attention to these small businesses is all the more odd given that Part X of the Bankruptcy Act provided the precedent for the voluntary administration regime under Part 5.3A of the Corporations Act.
ASIC’s comprehensive report will necessarily assist any review although confined, as it is intended, to the SBR process itself, and not its place in the wider economy.
Detailed report on SBR
A very useful complement to this ASIC report and the SBR process generally is the recently published thesis of Dr Amanda Bull, of QUT, which provides an in-depth analysis of the operation of SBR, comparisons with other jurisdictions, and recommendations for reform. See Small to Medium Enterprises: Destined to Fail or Supported to Thrive? A Critical Analysis of the Australian Restructuring Framework as it relates to Small to Medium Sized Enterprises, 2025.
