The Rescue Tool Nobody's Using Anymore

When Small Business Restructuring came in back in 2021, it was the best idea Australian insolvency law had produced in years. A director-led process, cheaper and faster than liquidation, that let a genuinely viable small business shed unsustainable debt and keep trading. No court battle. No creditors' meeting circus. Just a practitioner, a plan, and a vote.

For a few years, it caught on the way it should have. Appointments went from 448 in 2022-23, to 1,425 the year after, climbing toward roughly 3,000 the year after that. Then something changed.

The numbers went backwards

In FY26, SBR appointments sat at 1,714 — down 41% on the 2,918 recorded the year before. By May, the year-to-date comparison showed a 42% drop. July 2026, the first month of the new financial year, brought just 115 appointments, down again from 145 in June.

That's not a plateau. That's a tool that was gaining ground for three straight years suddenly losing it, fast.

At the same time, creditors have gotten harder to convince. Acceptance rates — the proportion of restructuring plans creditors actually vote to approve — have slid from around 80% down to somewhere between 66% and 67%. ASIC's own review of the process, published last year, found the mechanism was genuinely keeping struggling but viable companies afloat. That finding hasn't changed. What's changed is how often creditors are willing to say yes.

Why a good tool loses momentum

I've been arguing for years that this industry punishes people for coming forward early. SBR was meant to be the antidote — a process built specifically for the business that admits the problem while there's still something worth saving.

A few things are likely working against it now. Creditors who've been burned by weak or unrealistic plans in the early years are voting more cautiously. Construction and hospitality — the two industries that account for roughly half of all SBR appointments — are also two industries under the most sustained financial pressure right now, which means more of the businesses reaching this point are genuinely marginal, not just temporarily stretched, and creditors can tell the difference. And directors who could have used SBR early are, as always, waiting too long, until the numbers no longer support a plan a creditor would sensibly accept.

None of that means the tool is broken. It means the window where it works best — early, with a credible plan, before creditors have lost patience — is the exact window most directors still aren't using it in.

What I want directors to take from this

If you're running a business that's under real pressure but still fundamentally viable, SBR remains the best option most people have never heard of. It exists precisely for you. But the falling acceptance rate is a warning, not a footnote: creditors are no longer approving weak plans out of goodwill. The plan needs to be realistic, and it needs a practitioner who can put real numbers in front of creditors, not hope.

The earlier that conversation happens, the more credible the plan, and the more likely creditors say yes. Wait until the pressure is unbearable, and you'll walk into that same vote with a business creditors have already decided isn't worth the risk.

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