Restructuring finance
A business in trouble needs finance most, and can get it least.
That is the whole problem with a Small Business Restructuring. The process has two moments where money has to be found, both of them before the business is out of the woods, and mainstream credit has already stopped answering the phone. This is the facility built for those two moments.
What an SBR is
You stay in control. That is the part most directors do not know.
A formal process under Part 5.3B of the Corporations Act 2001 (Cth), for incorporated businesses with total liabilities of $1 million or less. Unlike the processes people picture when they hear the word insolvency, you stay in control.
| Stage | Time allowed | What happens |
|---|---|---|
| Appointment | On the day | A registered practitioner is appointed. Directors stay in control of the company. |
| The plan | 20 business days | The practitioner helps put a restructuring plan to creditors. |
| The vote | 15 business days | Creditors vote on the plan. |
| If accepted | Then ongoing | The company pays an agreed amount in full and final settlement of admitted debts, and keeps trading. |
Appointment
- Time allowed
- On the day
- What happens
- A registered practitioner is appointed. Directors stay in control of the company.
The plan
- Time allowed
- 20 business days
- What happens
- The practitioner helps put a restructuring plan to creditors.
The vote
- Time allowed
- 15 business days
- What happens
- Creditors vote on the plan.
If accepted
- Time allowed
- Then ongoing
- What happens
- The company pays an agreed amount in full and final settlement of admitted debts, and keeps trading.
Thirty five business days is not long to find money while running a business already under pressure. That is why funding certainty before commencement matters more here than the rate does.
The two moments
An SBR needs cash twice, and most businesses in one cannot self-fund either
The facility is approved as one limit and drawn at both.
Tranche 1, at commencement
Pays what has to be paid before the process can validly start: the practitioner's fee for the restructuring phase, outstanding employee entitlements, and settlement of any existing facility required as a condition of the SBR or of the funding.
Bringing wages, superannuation and leave current is a statutory precondition under section 453C of the Corporations Act 2001 (Cth). An SBR cannot validly commence while those amounts are owing, which is exactly the moment a business under pressure has no cash.
Tranche 2, once the plan is voted up
Drawn after creditors accept the restructuring plan, to fund the payment the plan requires. The ATO is usually the majority creditor, but the amount and the treatment of each creditor are set by the plan as voted, not by us.
Approving both tranches as one limit up front is the point of the structure. A director who does not know whether tranche two exists cannot let their practitioner scope a plan properly, and a plan scoped without funding certainty is the one that fails at the vote.
The facility
Built with private lenders, for a process the banks will not fund.
| How it works | |
|---|---|
| Structure | A single master limit, drawn in two tranches at the two moments the process needs cash. |
| Security | First or second mortgage over residential, commercial or mixed-use real estate. Subject to valuation, loan to value ratio and lender approval. |
| Purpose | Business purposes only. This is commercial credit and the consumer protections attaching to a home loan do not attach to it. |
| Timing | Indicative terms returned quickly, so a practitioner can scope the plan knowing whether the funding is there. |
| Arranged by | Andorra Private, the private lending brand, where facilities of this kind are arranged. |
Structure
- How it works
- A single master limit, drawn in two tranches at the two moments the process needs cash.
Security
- How it works
- First or second mortgage over residential, commercial or mixed-use real estate. Subject to valuation, loan to value ratio and lender approval.
Purpose
- How it works
- Business purposes only. This is commercial credit and the consumer protections attaching to a home loan do not attach to it.
Timing
- How it works
- Indicative terms returned quickly, so a practitioner can scope the plan knowing whether the funding is there.
Arranged by
- How it works
- Andorra Private, the private lending brand, where facilities of this kind are arranged.
Indicative only. Every facility is subject to valuation, loan to value ratio and lender approval, and nothing here is an offer of finance.
Want the facility arranged as well?
We do the whole job: rebuild the earnings, write the submission, and take it to the lenders who will actually do the deal. Send a few details and Nick reads it himself.
Working with your practitioner
Alongside them, never instead of them.
If you already have a practitioner appointed, we work to their timeline and their plan. If you do not, get one before you talk to us about money, because the process cannot start without them and the plan is theirs to build.
What a practitioner usually wants from us is one thing: an indicative range early enough to scope the plan against, rather than a maybe that resolves after the vote.
What this is not
- Commencing or running the restructuring, which only a registered Small Business Restructuring Practitioner can do
- Restructuring advice, insolvency advice, legal advice or tax advice of any kind
- Advising whether an SBR is the right path for your company, which is a question for your practitioner and your accountant
- Negotiating with the ATO or any other creditor on your behalf
- Any guarantee that a plan will be accepted, or that funding will be approved
The product detail sits with Andorra Private.
Facilities of this kind are private lending secured by mortgage, and they are arranged through Andorra Private, which is the brand set up for development, construction and private lending. The full product page, the in-depth guide and the indicative funding form are all there.
Before it gets to this
Most of the businesses we see here did not have to be here.
None of these needed a restructuring practitioner when they started.
- An ATO debt that was manageable eighteen months ago
- A covenant nobody read until the quarter it was breached
- A facility that expired and got rolled at whatever was offered
- A declined application nobody worked out the reason for
If you are not there yet, the work that keeps you out of it is ordinary and it is on this site.
Want a straight read on your deal?
Book a free call with Nick. Bring the numbers you have, and we will tell you the right service level and the fixed fee. No obligation.
Common questions
No, and we cannot be. A Small Business Restructuring can only be commenced and run by a registered Small Business Restructuring Practitioner. We are a finance broker. We are not an insolvency practitioner, a lawyer or a tax adviser, and nothing we say is restructuring, insolvency, legal or tax advice. What we do is fund the process once you and your practitioner have decided on it.
Because it has two moments that need cash before the business is out of trouble. At commencement, the practitioner's fee has to be paid and employee entitlements have to be brought current, which is a statutory precondition under section 453C of the Corporations Act. The process cannot validly start while wages, superannuation or leave are owing. Then, once creditors vote the plan up, the payment the plan requires has to be funded. A business already under pressure can rarely produce either from cash flow.
A single master limit approved up front and drawn in two tranches, one at commencement and one on creditor acceptance, secured by a first or second mortgage over residential, commercial or mixed-use real estate. Approving both tranches at the start is the point of it: a practitioner scoping a plan without knowing whether the second tranche exists is scoping in the dark.
At commencement, typically the practitioner for the restructuring phase, outstanding employee entitlements, and settlement of any existing facility required as a condition of the SBR or of the funding. On the second tranche, whatever the approved plan requires. The ATO is usually the majority creditor in an SBR, but the amount and the treatment of each creditor are set by the plan as voted, not by us and not by the lender.
Ideally yes, and if you do not have one, get one first. The process cannot start without them and the plan is theirs to build. If you are still working out whether an SBR is even the right path, that is a question for a practitioner and your accountant rather than for a broker, and we will say so rather than sell you a facility.
No. The purpose decides it, not the security. Credit taken wholly or predominantly for business purposes sits outside the National Credit Code even where residential property secures it, which means the consumer protections attaching to a home loan do not attach here, and a lender will ask you to sign a business purpose declaration confirming the purpose. That is worth understanding properly before you sign anything, and it is a good question for your solicitor.
Then the second tranche is not drawn, because there is no approved plan to fund. Nobody can promise you a creditor vote, and any broker who implies otherwise is telling you something they cannot know. What funding certainty buys you is a plan scoped against real numbers rather than a hope, which is the thing most within your control.
Where the numbers say a restructure does not fix the underlying problem, yes, and we would rather say it than arrange a facility that buys eighteen months and ends in the same place. That decision is properly your practitioner's and your accountant's. But we read the numbers either way and we will tell you what we see in them.
General information only, and not restructuring, insolvency, legal or tax advice. Not a credit assessment and not an offer of finance. Small Business Restructuring is a formal process that can only be commenced and conducted by a registered Small Business Restructuring Practitioner. Lending decisions rest with the lender and depend on your circumstances and their criteria.