ASIC review shows small business restructuring gains traction as tax debts shape outcomes

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Small business restructuring review

Highlights

ASIC's Report 847 reviewed 6,606 small business restructuring appointments from 2021 to 2026, revealing 76% transitioned to a restructuring plan, though acceptance rates decline to 67% by FY26.
The median unsecured creditor claim per appointment is $352,178, with approved plans proposing median dividends rising from 20 cents to 35 cents per dollar by FY26.
Fulfilled plans paid $292 million to unsecured creditors, with the Australian Taxation Office receiving about 78% as it accounts for 83% of admissible unsecured claims and dominates most restructuring plans.

Five-year review of restructuring trends

As reported by ASIC, Report 847 examined 6,606 small business restructuring appointments that commenced between 1 January 2021 and 30 June 2026, providing a five-year view of how the regime is being used and the outcomes it is producing. ASIC Commissioner Kate O’Rourke says the process is now a well-established restructuring option for small businesses in financial difficulty, although changes in creditor behaviour and debt composition are affecting results.

The review finds the process is used mainly by established trading businesses with relatively simple creditor profiles. The median age of companies entering small business restructuring is seven years, while most appointments involve relatively few unsecured creditors, with a median of two creditors from financial year 2024 onwards. The median estimated value of admissible unsecured creditor claims is about $352,178, comfortably below the $1 million eligibility threshold.

Across the full period, 76% of appointments transition to a restructuring plan. That proportion falls from 87% in FY24 to 73% in FY25 and 67% in FY26 as creditor rejections increase. At the same time, the median dividend proposed to unsecured creditors rises from about 20 cents in the dollar in the regime’s earlier years to 35 cents in the dollar by the end of FY26, suggesting companies increasingly need to offer higher returns to secure support.

Tax debt dominates creditor exposure

Approved plans are generally producing positive outcomes, with the majority completed successfully. Almost half of approved plans are fulfilled within one year and more than three-quarters within two years, according to the review.

Liquidators report that fulfilled plans have paid $292 million to unsecured creditors, with about 78% of that total going to the Australian Taxation Office. The ATO is a creditor in almost all proposed plans and accounts for about 83% of total estimated admissible unsecured claims. In nearly three-quarters of proposed plans, the ATO holds more than 80% of admissible unsecured claims, and that concentration increases over the review period.

With the report’s release, ASIC is urging company directors to monitor their businesses’ financial position and seek professional advice early when difficulties emerge. The regulator says acting sooner can help preserve options such as small business restructuring, while delays may leave the process unavailable or no longer viable. ASIC has also published new resources, including an online learning module in its Small Business Director Essentials hub, to help directors identify warning signs and respond earlier.

Previously, we outlined the main factors behind Europe’s macro policy debate over balancing inflation, debt and investment.

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