Simplified Debt Restructuring (small business)
Small companies (<$1M liabilities) can use SDR to restructure without full external admin.
Who must comply
Small business companies in financial distress meeting eligibility tests.
What triggers it
Eligibility (under $1M liabilities, current taxes paid, no related-party debts) + financial distress.
When due
Same-day appointment of Restructuring Practitioner.
Evidence required
Form 506; creditor list; restructuring plan within 20 days.
Max penalty
n/a — protective mechanism. Eligibility breach risks falling back to full administration.
Summary
Part 5.3B Corporations Act (introduced January 2021) lets directors of small businesses (under $1M total liabilities, no related-party liabilities) retain control of the company while a Small Business Restructuring Practitioner develops a debt restructuring plan. 20-day proposal period + 15-day creditor vote.
Enforced by
Source legislation
Entity types
Topics
Related obligations
- CWLTHPrevent insolvent trading (s 588G)Directors must prevent the company incurring debts while insolvent — or face personal liability.
- CWLTHAppoint voluntary administrator under Part 5.3A Corporations ActDirectors can place company in voluntary administration when insolvent — pause creditor claims for restructuring window.
- CWLTHApply for a Director Identification Number (Director ID)Every director needs a Director ID before appointment — apply via ABRS.
- CWLTHComply with directors' general law and statutory dutiesDirectors owe duties of care and diligence (s 180), good faith (s 181), no improper use of position (s 182) or information (s 183).
- CWLTHPay company PAYG/GST/SG or face Director Penalty Notice (DPN)Directors personally liable for unpaid company PAYG, GST + SG via DPN regime.
- CWLTHRegister security interests on the PPSRSecured creditors must register on the Personal Property Securities Register to preserve priority.
Frequently asked questions
- Who must comply with Simplified Debt Restructuring (small business)?
- Small business companies in financial distress meeting eligibility tests.
- What triggers Simplified Debt Restructuring (small business)?
- Eligibility (under $1M liabilities, current taxes paid, no related-party debts) + financial distress.
- When is Simplified Debt Restructuring (small business) due?
- Same-day appointment of Restructuring Practitioner.
- What is the maximum penalty for Simplified Debt Restructuring (small business)?
- n/a — protective mechanism. Eligibility breach risks falling back to full administration.
- What evidence is required for Simplified Debt Restructuring (small business)?
- Form 506; creditor list; restructuring plan within 20 days.
Source: https://asic.gov.au/regulatory-resources/insolvency/small-business-restructuring. Rules Mate is not a law firm. Always verify against the live regulator source before acting.