Small Business Restructuring appointments increases three-fold in first half of 2024-25

A sharp rise in small business restructuring appointments is reshaping Australia’s insolvency landscape, with cases tripling in the first half of the 2025 financial year.

More small businesses are opting to take an SBR appointment as a way of keeping their businesses operating.

A three-fold increase in the Small Business Restructuring schemes in the first six months of the 2025 financial year is reshaping the business recovery landscape and is set to continue to gain momentum, according to Insolvency ­Australia.

There have been 1569 SBR appointments from July 1 to January 19, according to the latest data from the Australian Securities & Investments Commission, up from 522 over the same period in the previous financial year. SBR appointments far outstripped the 807 voluntary administrations in the same period.

Insolvency Australia director Gareth Gammon said small business restructuring would continue to increase as more and more directors sought early intervention to preserve businesses and jobs.

“Collaboration and restructuring are now being prioritised over traditional liquidation,” said Mr Gammon, who wrote the latest Corporate Insolvency Index. “This change in mindset has positioned liquidators as pivotal advisers for distressed businesses – and it will have positive implications for long-term economic stability.”

Business Reset founder Jarvis Archer said the group could not understate how transformative SBRs could be for small business owners. “They change lives – and that’s a good thing for them, everyone who deals with their business, and for the economy generally,” Mr Archer said.

“A business trading to the bitter end, or shutting down, causes ­losses and doesn’t result in creditor returns.

“Despite its critics who say SBRs are just delaying inevitable failure, in my business we’ve seen strong success, with less than 5 per cent of over 200 SBR proposals ­accepted by creditors being terminated before completion.”

Insolvencies continued to rise to record levels. According to ASIC, there have been 7755 insolvency first appointments between July 1 last year and January 19.

The Corporate Insolvency Index – which in contrast to ASIC counts all appointments – found that there were 10,268 appointments recorded, reflecting a 53 per cent increase year-on-year compared to the previous corresponding period.

Mr Gammon said the surge ­reflected the ongoing impact of tightened credit conditions and economic pressures, particularly on smaller businesses.

“That’s in addition to the Australian Taxation Office’s singular focus on recovering accrued tax debt,” Mr Gammon said.

According to the Corporate Insolvency Index, Victoria stood out with a 77 per cent increase in insolvencies in the first half of the 2025 financial year compared to the corresponding period a year earlier, largely driven by increased restructuring engagements.

South Australia experienced the most dramatic growth with a 90 per cent rise; while Tasmania recorded a 127 per cent surge, reflecting heightened insolvency ­activity from a smaller base. NSW and Queensland, while maintaining the largest appointment volumes at 3800 and 1878 respec­tively, showed a rise of 36 per cent and 59 per cent, respectively, indicating continued pressures in these key economic hubs.

Insolvency Australia director Gareth Gammon.

Mr Archer said there was “no hiding this year” for small businesses.

“Covid and difficult trading conditions are no longer being accepted by the ATO and other creditors for unpaid debts and insolvent trading,” he said.

“The very high level of unpaid ATO debt means a lot of businesses are trading that can’t pay their debts as they fall due.

“This means they can’t pay the debts they’re incurring every day, which is trading while insolvent. The ATO very clearly intends to stop this happening.”

Scott Andersen, principal of Worrells in Geelong, said the economic environment continued to pose challenges for Australian businesses.

“Persistent inflation, high interest rates, reduced consumer spending, and increased supply chain costs have some businesses struggling to balance cash flow,” Mr Andersen said.

“The pressure is particularly pronounced for businesses that took on pandemic-era debt.

“One surprise is the resilience of businesses in certain regional areas, which continue to fare slightly better than their metropolitan counterparts.

“However, data also shows that industries such as construction and hospitality remain impacted, reflecting their vulnerability to rising costs and shifting consumer behaviour.”

Originally published as Small Business Restructuring appointments increases three-fold in first half of 2024-25