The number of businesses attempting to trade while restructuring has increased from 448 in 2022/23, to 1,425 in just one financial year, and the Australian Securities and Investments Commission (ASIC) predicts that number in 2024/25 will soar to over 3,000.
The process enables eligible companies to retain control of their business, property, and affairs while developing a restructuring plan and making arrangements with creditors.
To be eligible, a company must not have been restructured in the preceding seven years (and no director can have been a director of another company that underwent restructuring during a similar period), and its total liabilities must not exceed $1 million.
Generally, creditors have been supportive, with 87 percent of payment plans commenced during the review period of July 1, 2022, to December 31, 2024, being approved.
However, ASIC notes that there has been a decline in the rate of SBRs transitioning to a plan over the years, with 88 percent doing so in FY22–23, compared to 79 percent in FY24–25 (to 31 December 2024).
Liquidators reported that more than $101 million has been paid to unsecured creditors for finalised and fulfilled plans commenced during the review period.
Based on analysis of payee details from the final returns, around 87 percent of the funds paid to creditors went to to the Australian Taxation Office (ATO), a total of approximately $88 million. The average dividend yield was 21 cents per dollar.
The upswing is also keeping liquidators busy.
During the current review period, 46 percent of registered liquidators had been involved in one or more SBRs; in ASIC’s earlier review, which covered Jan. 1, 2021 to June 30, 2022, only 6 percent were involved in that type of work.
According to CreditorWatch, the number of business failures last year was the highest since the COVID-19 pandemic. The average failure rate was 5.04 percent, up from 3.97 percent in the 2023 financial year. The previous high was 5.08 percent in 2020.
However, it seems things may have turned a corner.
In May this year insolvencies dropped 12 percent from that peak, with a reduction of 0.9 percent from April to May of 2025 continuing that trend. Payment defaults between businesses also fell 11.8 percent in May, and are down 18.3 percent from their peak in December of last year.
CreditorWatch points out that the rates for both measures have “levelled out, albeit at quite elevated levels.”
“This suggests some of the pressures on businesses from higher costs and constrained consumer spending may be beginning to be balanced out by the favourable impacts of last year’s income tax cuts, other cost-of-living support measures, the start of interest rate relief and a slower rate of cost increases,” the company says.
