What Is Small Business Restructuring? Ask The ATO. It Holds 83 Per Cent Of The Claims.

Small business restructuring lets a company with no more than $1 million in total liabilities keep trading while a restructuring practitioner puts a debt plan to its creditors. ASIC published its five-year review on 11 November, covering 6,606 appointments. One finding changes how to read all of it.

In almost three-quarters of proposed plans, the Australian Taxation Office held more than 80 per cent of the admissible unsecured claims.

So the creditor deciding whether your plan lives is the one you have been quietly not paying. ASIC does not break that balance down by tax type. Outstaffer sells employment and has a commercial interest in how you carry payroll, so take what we do as disclosed.

What small business restructuring is, on ASIC’s own figures

Report 847 covers appointments from 1 January 2021 to 30 June 2026. The companies using it are not the ones you might picture: median age at appointment was seven years, and almost two thirds had been registered for more than six.

Their creditor lists are short. From FY24 the median appointment had two unsecured creditors, and median admissible unsecured claims ran to about $352,178, well under the $1 million ceiling.

That is an established trading business with one dominant creditor. Not a failed experiment.

Who actually approves a restructuring plan

The ATO was a creditor in almost all proposed plans and accounted for roughly 83 per cent of total estimated admissible unsecured claims. Of the $292 million registered liquidators reported paying to unsecured creditors on fulfilled plans, about 78 per cent went to the ATO.

Two numbers follow from that, and both have moved against the company.

The approval rate fell from 87 per cent to about two thirds

Across the five years, 76 per cent of appointments made it to a restructuring plan. Year by year the picture is worse: 87 per cent in FY24, 73 per cent in FY25, 68 per cent in FY26, as creditors rejected more of what was put to them.

The price of a yes went from 20 cents to 35

The median dividend proposed to unsecured creditors rose from around 20 cents in the dollar in the regime’s early years to 35 cents by the end of FY26. Companies are offering more and being refused more often.

What a plan costs on the median figures

Take the median claim of $352,178 at the median proposed return of 35 cents. That is about $123,000 back to creditors, four fifths of it to the tax office on the review’s own payment split. Add median total remuneration on fulfilled plans, about $22,287, and the scale is $145,000 over the life of a plan.

Treat that as a scale, not a quote. Medians drawn from different parts of a dataset do not belong in one sum, and ASIC does not present them that way.

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The counter-argument and where it stops

The honest counter is that the regime works. Of companies that fulfilled a plan, 98 per cent were still registered and not in another external administration a year later, 91 per cent after two years, 79 per cent after three. Most approved plans are completed, and almost half inside a year.

Where it stops is ASIC’s own caveat. Those are indicators of continued registration, and the report says plainly they do not establish that a company stayed solvent, kept trading or traded well.

The second limit is the door itself. Eligibility is capped at $1 million of total liabilities on the day of appointment, so the debt that makes you need the process is the same debt that eventually locks you out of it. ASIC’s accompanying message to directors was to act early, before the options narrow.

Which makes this a cashflow question long before it is an insolvency one. What ASIC is counting is overwhelmingly money the tax office was not paid, so the working capital a hire actually needs is the number to watch, not the salary, and what lenders will fund matters before the ATO balance does.

To keep the employment side of that bill paid on time rather than accruing quietly, set up a role and see the full cost. Or find out what small business restructuring is the way these 6,606 companies did.