The Rapid Decline in SBR Activity: What It Means for Accountants and Their Clients
Small Business Restructuring (SBR) was designed to help viable businesses manage financial distress without losing control. Following a strong uptake of the process throughout 2024 and a repaid start in 2025, SBR activity has fallen dramatically. This trend raises critical questions for accountants: Why the decline? What does it mean for your clients? And what are the critical factors for a successful SBR proposal.
The Data: A Clear Downward Trend
The graph above illustrates SBR activity from 2021 to 2025. Key observations:
- Early 2025 Surge: SBR appointments peaked in March at around 350 cases, the highest on record.
- Rapid Decline: From April onward, activity dropped sharply, finishing the year below 100 cases in December.
- Contrast with Previous Years: 2023 and 2024 showed steady or rising activity, making 2025’s reversal even more significant.
Possible Reasons for the Decline
- Economic Stabilisation: Businesses may have recovered from interest rate pressures and inflation shocks earlier in the year, and more broadly, the negative effects of the COVID pandemic.
- Creditor Pushback: Increased scrutiny and resistance to SBR proposals could be limiting uptake, particularly from the Australian Taxation Office (ATO).
- Awareness & Misconceptions: Many small business owners are unaware of the SBR process, or misunderstand SBR its features, eligibility criteria and benefits.
- Alternative Paths: Some directors may opt for liquidation or informal arrangements instead.
ATO Assessment of SBR Proposals
The ATO is often a major stakeholder in an SBR process and holds significant voting power for the acceptance or rejection of an SBR proposal. The ATO has published common reasons for rejecting SBR proposals, which include:
- Non repayment of director or related entity loan accounts
- Poor tax compliance history
- Non-payment of tax liabilities
- It would provide an unfair advantage over other businesses.
As advisors, accountants should be aware of, and assess these issues when providing preliminary guidance to clients on the topic of SBR.
Implications for Accountants
Accountants play a pivotal role in advising clients on financial distress. The decline in SBR activity signals:
- Need for Early Intervention: With fewer formal restructuring options being used, proactive financial health checks are critical.
- Exploring Alternatives: Accountants should be familiar with other insolvency pathways, including voluntary administration and liquidation.
- Client Education: Many small businesses still lack awareness of SBR benefits – accountants can bridge this gap.
What’s Next?
Will SBR rebound, or is this the beginning of its decline? Regulatory changes or renewed education campaigns could revive interest. For now, accountants should monitor trends closely and ensure clients understand all available options.
If you have clients showing signs of financial distress, now is the time to act. Contact our team to discuss tailored solutions, including SBR and other restructuring strategies.
About the author
Greg Quin is a Managing Partner at HLB Mann Judd Insolvency WA and has been with the team for 15 years. Greg oversees the daily operations of the many insolvency appointments managed by the HLB Insolvency team and looks after the operations of the practice.
If you have any queries about insolvency matters, please feel free to contact Greg on 08 9215 7900, 0402 943 091 or via email to gquin@hlbinsol.com.au.
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