In this Prologue of the Sounds of the Baskerville Podcast James Flaherty, talks with two insolvency experts, Chris Baskerville and Bill Cotter, about the Small Business Restructuring (SBR) regime in Australia.
SBR is a relatively new option for businesses with less than $1 million in debt. It allows them, with the help of a Small Business Restructuring Practitioner (SBRP), to restructure their affairs and avoid liquidation.
Bill and Chris explain that the SBR process is fast, efficient and a bit more flexible than formal insolvency events. SBR allows businesses to propose a plan to their creditors that can reduce their debt and improve their cash flow.
The SBR process has a high success rate, with over 80% of the plans being accepted by creditors, often the Australian Taxation Office (ATO), which is typically the largest creditor.
Listen in to the Podcast or watch the video as Chris and Bill share some examples of businesses that have benefited from the SBR regime, such as a services business in northern NSW that saved itself from $800,000 in debt.
Bill and Chris emphasise the importance of involving the accountant in the SBR process. They can help prepare the reports the business needs as part of the SBR. They will also be the ones with the ongoing relationship with the client after the SBR is completed.
An issue they ponder is how the SBR system may evolve and maybe the ATO will be less accommodative over time. So businesses should take advantage of the opportunity while it is still available.
It’s the old story, but never so more important – Chris and Bill say to businesses that are struggling with debt – seek help from a trustworthy adviser or an SBRP as soon as possible. Don’t wait until it’s too late.
