Get on the front foot when facing financial difficulties

3 February, 2025

Learn more about the corporate insolvency framework if uncertain about your financial future

As our Momentum survey reveals, many small businesses are doing it tough. If you are facing financial distress, you should seek professional advice. Seeking advice early could give you access to more pathways to turn your business around, such as by negotiating with creditors, restructuring your operations and gaining a better understanding your obligations should your business become insolvent.

In 2021, changes to the corporate insolvency framework were introduced to help smaller companies facing financial distress. The changes introduced the Simplified Restructuring Process (SRP) and the Simplified Liquidation Process (SLP) to reduce complexity, cost and time. These pathways provide flexibility for smaller companies to work through their financial challenges in a responsible manner, supporting businesses with the potential to recover while offering a streamlined process for those that need to wind up operations.

Unincorporated enterprises such as sole traders and partnerships are subject to personal bankruptcy laws, which come with a range of insolvency options and requirements under the Bankruptcy Act 1966.

The idea of insolvency can be intimidating, but it’s crucial to take timely action and evaluate whether your business remains sustainable. You can always contact the NSW Small Business Commission for information about where to go for further guidance and support.

For further information see:

Simplified restructuring

Your business may have a promising future but could be facing temporary financial difficulties due to factors beyond your control, such as temporary downturns, market shocks, or delayed payments. If your business is struggling to meet its financial obligations, the Simplified Restructuring Process (SRP) (also known as the Simplified Debt Restructuring) provides eligible companies with a streamlined mechanism to restructure their debts and regain financial stability.

The SRP is more affordable than traditional insolvency procedures, resolution typically occurs within weeks, and it enables businesses to restructure debts while continuing operations.

It is available to companies with liabilities under $1 million who meet compliance requirements for employee entitlements and tax lodgements.

Features include:

Business owners retain control of operations throughout the restructuring process.
A Small Business Restructuring Practitioner (SBRP) is appointed to guide and oversee the process.
Businesses create a plan detailing repayment terms,
The plan is subject to approval by more than 50 percent of creditors by value within 15 business days.
A moratorium prevents unsecured creditors from initiating or continuing recovery actions during the process.
Simplified voting and administrative processes reduce procedural burdens.

Further information:

Simplified liquidation

Sometimes, despite your best efforts, continuing to operate your business may no longer be a viable option.

Deciding to wind up a business is never easy, and in some cases, liquidation may not be a choice but a legal obligation, either to act in the best interests of creditors or enforced. The Simplified Liquidation Process (SLP) has been established to help eligible companies meet their obligations in a more straightforward and affordable way.

SLP offers the tools and support needed to manage this transition effectively, with lower costs and a quicker reallocation of resources, while maintaining equitable treatment of creditors and their rights.

It is available to businesses incorporated under the Corporations Act 2001 that have total liabilities of no more than $1 million. The SLP only applies to a creditor’s voluntary winding up of a company where the event that triggers the start of the winding up occurs on or after 1 January 2021.

The liquidator administers the winding-up of the company's affairs in a streamlined manner, reducing the procedural requirements typically associated with standard liquidations, while maintaining creditor protections.

Further information: