SBR Is Not All Beer and Skittles
Small Business Restructuring is a useful process, but it is not all beer and skittles.
The ATO, often the largest creditor, will look closely at viability, compliance, the offer and the company’s records.
In my experience, the ATO will look at whether the business is viable going forward, whether there is a realistic budget, how ongoing tax obligations can be met, whether the proposal gives a better return than liquidation and whether poor tax compliance history has been properly explained.
Director loans and related party accounts need to be properly disclosed and properly dealt with. Trying to “fix” the balance sheet by adjusting internal accounts or moving entries around to hide a problem is not restructuring. It is a red flag.
SBR generally works best where there is still a trading business, reliable cash flow, capacity to meet ongoing obligations, proper books and records and a realistic plan to address future compliance issues.
For advisers, the real question is not just whether the ATO will accept a cents in the dollar proposal. The better question is whether this is a credible plan for a viable business.
