Who must comply with Simplified Debt Restructuring (small business)?

Small companies (<$1M liabilities) can use SDR to restructure without full external admin.

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.

Applies when the business has an incorporated company and financial distress / winding down and small business entity.

How the regulator frames it: 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.

Jurisdiction: Commonwealth law, so the test is the same in every state and territory.

Outcome across the 35 industries Rules Mate maps (35 of 35: no).

The answer is the same in every industry: no. Industry does not change who must comply.

Structure does not change the answer across all industries: for every structure the answer is "no".

Size does not change the answer across all industries: at every size band the answer is "no".

Each line is one run of the Rules Mate applicability engine for a single business profile, with the reason the engine gives:

• Pty Ltd company in real estate agents with 6–19 employees, turnover $1M–$3M: does not apply. Requires an incorporated company and financial distress / winding down and small business entity.

Starting from a small or large professional services company that does not otherwise meet the test, each of these single facts changes the engine's answer:

• The business is in financial distress or winding down: it then applies (incorporated company (Corporations Act) · Winding down · Small business entity (aggregated turnover under $10M)).

When due

Same-day appointment of Restructuring Practitioner.

Frequency

When a triggering event occurs

Evidence to keep

Form 506; creditor list; restructuring plan within 20 days.

Status

Current

Priority

High

Maximum penalty: n/a — protective mechanism. Eligibility breach risks falling back to full administration.

Rules Mate has not yet classified the audit or assurance level for this obligation. Any audit, review or certification requirement is set by the regulator source listed below.

• Apply for a Director Identification Number (Director ID): Every director needs a Director ID before appointment — apply via ABRS.
• Appoint voluntary administrator under Part 5.3A Corporations Act: Directors can place company in voluntary administration when insolvent — pause creditor claims for restructuring window.
• Comply with directors' general law and statutory duties: Directors owe duties of care and diligence (s 180), good faith (s 181), no improper use of position (s 182) or information (s 183).
• Prevent insolvent trading (s 588G): Directors must prevent the company incurring debts while insolvent — or face personal liability.
• Discharge of directors' duties — practical evidence: Directors must contemporaneously document discharge of duties for defence in s 180-183 cases.

Rules Mate tracks 9 published obligations tagged "directors", 5 of them rated critical. For a professional services Pty Ltd company with 6–19 employees operating in every state, 6 of those apply outright. This obligation is rated high priority, and is triggered by events.

Regulated by Australian Securities and Investments Commission.

ASIC: Corporate regulator administering the Corporations Act, financial services and credit licensing (AFSL/ACL), markets supervision, insolvency, and registries (ASIC and ABRS).

• Australian Securities and Investments Commission

Corporations Act: The foundational federal Act for Australian corporate law.

• Corporations Act 2001

Free tools that help with this obligation:

• Director ID checker
• Director duties check
• Whistleblower policy builder