How long does small business restructuring take?
Short answer
About 7 weeks from appointing the practitioner to knowing whether creditors accept the plan. The law gives 20 business days to lodge a restructuring plan, extendable once by up to 10, then 15 business days for creditors to vote. If it passes, payments usually run for 1 to 3 years. Getting lodgements and super up to date beforehand is often the slowest part. See the small business restructuring guide.
The timeline, step by step
| Stage | How long | What happens |
|---|---|---|
| Before appointment | Days to months | Lodge overdue BAS and returns, pay employee super that is due, confirm liabilities are under $1 million, choose a practitioner. |
| Day 1 | Directors resolve to appoint the restructuring practitioner. Unsecured creditors, including the ATO, are frozen from enforcement. You keep running the business. | |
| Proposal period | 20 business days, extendable once by up to 10 | Practitioner reviews the books, verifies eligibility, and helps you draft the plan and the offer to creditors. |
| Voting period | 15 business days from when creditors receive the plan | Creditors return their statements. The plan passes if a majority in value of those who vote say yes. Related creditors are excluded. |
| Plan period | Commonly 1 to 3 years | Company pays the agreed amounts; the practitioner distributes them. Plan ends when the last payment is made. |
In calendar terms, 35 business days is roughly 7 weeks. Extensions, or a dispute about who is owed what, can stretch that to 9 or 10 weeks.
What slows it down
- Unlodged returns. The single biggest delay. A practitioner cannot be appointed until every tax lodgement is current, and preparing years of BAS from poor records takes time.
- Unpaid super. Employee entitlements that are due, including super, must be paid before the plan goes to creditors. If the money is not there, the process stalls.
- Disputed debts. If a creditor challenges the amount shown for it in the debt schedule, the voting period can be extended while it is sorted out.
- The ATO's questions. As the largest creditor in most cases, the ATO reviews the proposal and often asks for more detail on cash flow and past compliance. What cents in the dollar the ATO accepts explains what it looks for.
- Breach during the plan. A missed plan payment not fixed within 30 business days ends the plan, and the frozen debts come back in full.
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The 21 day clock that matters more
The 7 weeks above is the process. The date that decides whether the process protects you personally is different. If the ATO has posted a director penalty notice, appointing a practitioner within 21 days of the date on the notice remits a non-lockdown penalty. Appointing on day 22 does not, however well the plan then goes. Lockdown penalties are not remitted by restructuring at all. Does SBR protect me from a DPN sets out the detail.
That is why the preparation stage cannot be left until a notice arrives. A company whose lodgements are years behind cannot get a practitioner appointed in 21 days. If restructuring is not achievable in time, liquidation can be started in a few days and has the same remitting effect on a non-lockdown notice, at the cost of the business. SBR versus liquidation compares the two.
What to do next
- Find out today which BAS, returns and super payments are outstanding, because that list sets your real start date.
- If a director penalty notice has arrived, count 21 days from its date and tell any practitioner you speak to about that deadline first.
- Ask the practitioner for a written timeline that shows the proposal period, the vote date and the proposed plan length before you appoint them.
Related questions
Can I keep trading while the restructuring is running?
Yes. That is the point of the process. The directors stay in control of the business during the proposal and voting periods and throughout the plan. Transactions outside the ordinary course of business need the practitioner's consent, and creditors cannot enforce debts that arose before the appointment while the restructuring is on foot.
Is there a maximum length for a restructuring plan?
The law does not fix a maximum in months; the plan ends when its terms are fulfilled. In practice most plans run between 1 and 3 years, and practitioners and the ATO generally prefer shorter plans because the longer the period, the greater the chance of a breach. A longer plan that offers more can still fail if the ATO doubts the business can sustain it.
Running out of time to restructure?
A specialist can tell you what is achievable inside your deadline. Free, confidential.
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