As published in the July-September 2022 issue of Master Builder Magazine.
In a landmark result for the industry, a Queensland building-related business has successfully negotiated a significant reduction of its debt under recent changes to Corporations Law.
Known as the Small Business Restructuring Process (SBRP), this new legislation was introduced by the federal government in January 2021 as a way for small businesses to negotiate an arrangement with creditors without losing control of their business as they would in traditional insolvency action.
CEO of Xact Accounting, Michael Renton believes the SBRP could be the lifeline the industry needs to keep struggling builders and tradies in business.
“There are plenty of good builders out there that have found themselves going backwards as a result of cost blow-outs and other circumstances beyond their control,” he said.
They now face every day with a debt burden that will not only take years to pay down but is impacting their ability to trade their way to profit. The knock-on impact when a business fails is enormous, so it’s fantastic that we now have SBRP as a potential solution for those in financial stress.
As a further benefit to QBCC licence holders, the decision to enter into an SBRP arrangement is not considered an insolvency event by the regulator, who would ordinarily exclude licence holders for a three-year period in the event they were subject to standard insolvency action like the appointment of an administrator.
To qualify for SBRP, businesses need to meet certain conditions, including having total debt of less than $1 million, super and other staff entitlements must be up to date and whilst not all tax payments need to be paid, all ATO lodgements must be up to date.
Want to know whether SBRP is the right option for you? Request a consultation with us!
(Consultation is free for Master Builders Queensland members. Find more member discounts here!)
