Small Business restructuring vs Voluntary Administration
Small Business Restructuring gets a lot of attention, but it is not always the right process for every distressed business.
SBR can be useful and cost-effective where debts are under $1 million, lodgements and employee entitlements are up to date, the business is viable and there is a realistic proposal creditors can support.
But in some situations, you cannot make a square peg fit a round hole. That is where voluntary administration may need to be considered.
Voluntary administration is more formal than SBR. One key difference is that control of the company passes to the voluntary administrator. That does not occur in an SBR.
VA may be more appropriate where debts exceed the SBR threshold, employee entitlements cannot be brought up to date, a longer restructuring period is required, there are serious stakeholder disputes, broader operational changes are required, or a sale of the business or assets needs to be completed.
Sometimes SBR will be the right tool. Sometimes it will be VA. Sometimes liquidation is the only realistic option. The earlier that discussion happens, the more options usually remain.
