Learnings From Recent Small Business Restructuring (SBR) Successes

A tale of a cash poor but asset rich business, and an upfront contribution being the difference for creditors

A lot has been said about the small business restructuring process. At Worrells, we have had our fair share of SBR (small business restructuring) appointments. We would like to share our experiences with two SBRs that were accepted by the ATO (Australian Taxation Office), who tends to be the sole or major creditor in most SBRs we see.

A cash poor but asset rich business

Company A operated a motor mechanical repair business in metropolitan Melbourne. Due to the pandemic, Company A encountered staff shortages, and saw a large price increase on materials. At the same time, the Company incurred trading losses and was accruing significant interest and penalties on unpaid taxation debts. The Company's cash position was inadequate to allow it to sustain the losses and satisfy its taxation obligations.