Part 5.3B in 2025 - interesting developments and growth

Stefano Calabretta and Lizzie Brown

ASIC has released “Report 810 – Review of Small Business Restructuring Process: 2022–24”, providing the most comprehensive analysis to date of how Part 5.3B of the Corporations Act 2001 (Cth) is functioning in practice. 

Introduced through the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth), which came into effect on 1 January 2021, the Small Business Restructuring (SBR) regime marked Australia’s largest corporate insolvency reform in three decades. The framework was implemented during the COVID-19 pandemic, amid fears of widespread business collapse during the uncertainty of national lockdowns and was designed to provide a simplified and cost-effective restructuring option for small companies with liabilities under $1 million. 

According to ASIC’s June 2025 review, there were 3,388 SBR appointments between 1 July 2022 and 31 December 2024, compared to just 82 in the regime’s first 18 months. SBRs now account for about 20 percent of all corporate insolvency appointments nationwide. 

ASIC Commissioner Kate O’Rourke stated that “after a slow start, the recent growth of SBRs shows that the regime is starting to deliver on the intended policy objective of reducing complexity and costs for small businesses and ultimately helping them to survive.” Data from the report supports this with 93 percent of companies that completed an SBR plan by 31 March 2025 remained registered as of 30 April 2025. 

Advantages 

The regime’s key advantages include reduced cost, greater efficiency, and ease of access compared to voluntary administration. A significant benefit is that directors retain control of their businesses throughout the process, which helps mitigate day-to-day business disruptions and preserving relationships with clients and suppliers. 

The Australian Taxation Office (ATO) also applies a detailed evaluative approach when voting on restructuring proposals, considering factors such as a company’s compliance history, ability to fulfil payment plans, hypothetical return to creditors in liquidation, and potential breaches of the Corporations Act. This helps ensure that the proposals are assessed on genuine commercial viability from a diverse range of indicative factors.  

Limitations 

Practitioners caution that the SBR regime “may not address the root cause of financial distress and instead allows a company to face similar financial issues in the future.” Furthermore, the policy’s paternalistic origins during COVID-19, when protection of small business was the priority, may not align with the current economic focus on productivity, innovation, and long-term competitiveness. 

Practical issues persist. Creditors are given only 15 business days to review and vote on restructuring proposals, with approval requiring support from over 50 percent of unrelated creditors by value. This can be a challenging timeframe for complex creditor groups. The $1 million liability threshold may now exclude many viable enterprises facing inflationary pressures and rising costs. 

Looking Ahead 

The SBR framework has undoubtedly helped thousands of small businesses survive, offering a faster and cheaper alternative to traditional insolvency.  

As the 2025 data shows, Part 5.3B is now a growing feature of Australia’s insolvency landscape. Its future effectiveness will depend on ensuring that the regime evolves beyond crisis-era protection towards long-term, strategic reform that strengthens small-business resilience and efficiency.  ASIC has released “Report 810 – Review of Small Business Restructuring Process: 2022–24”, providing the most comprehensive analysis to date of how Part 5.3B of the Corporations Act 2001 (Cth) is functioning in practice. 

Introduced through the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth), which came into effect on 1 January 2021, the Small Business Restructuring (SBR) regime marked Australia’s largest corporate insolvency reform in three decades. The framework was implemented during the COVID-19 pandemic, amid fears of widespread business collapse during the uncertainty of national lockdowns and was designed to provide a simplified and cost-effective restructuring option for small companies with liabilities under $1 million. 

According to ASIC’s June 2025 review, there were 3,388 SBR appointments between 1 July 2022 and 31 December 2024, compared to just 82 in the regime’s first 18 months. SBRs now account for about 20 percent of all corporate insolvency appointments nationwide. 

ASIC Commissioner Kate O’Rourke stated that “after a slow start, the recent growth of SBRs shows that the regime is starting to deliver on the intended policy objective of reducing complexity and costs for small businesses and ultimately helping them to survive.” Data from the report supports this with 93 percent of companies that completed an SBR plan by 31 March 2025 remained registered as of 30 April 2025. 

Advantages 

The regime’s key advantages include reduced cost, greater efficiency, and ease of access compared to voluntary administration. A significant benefit is that directors retain control of their businesses throughout the process, which helps mitigate day-to-day business disruptions and preserving relationships with clients and suppliers. 

The Australian Taxation Office (ATO) also applies a detailed evaluative approach when voting on restructuring proposals, considering factors such as a company’s compliance history, ability to fulfil payment plans, hypothetical return to creditors in liquidation, and potential breaches of the Corporations Act. This helps ensure that the proposals are assessed on genuine commercial viability from a diverse range of indicative factors.  

Limitations 

Practitioners caution that the SBR regime “may not address the root cause of financial distress and instead allows a company to face similar financial issues in the future.” Furthermore, the policy’s paternalistic origins during COVID-19, when protection of small business was the priority, may not align with the current economic focus on productivity, innovation, and long-term competitiveness. 

Practical issues persist. Creditors are given only 15 business days to review and vote on restructuring proposals, with approval requiring support from over 50 percent of unrelated creditors by value. This can be a challenging timeframe for complex creditor groups. The $1 million liability threshold may now exclude many viable enterprises facing inflationary pressures and rising costs. 

Looking Ahead 

The SBR framework has undoubtedly helped thousands of small businesses survive, offering a faster and cheaper alternative to traditional insolvency.  

As the 2025 data shows, Part 5.3B is now a growing feature of Australia’s insolvency landscape. Its future effectiveness will depend on ensuring that the regime evolves beyond crisis-era protection towards long-term, strategic reform that strengthens small-business resilience and efficiency.