SBR Funding That Made All the Difference

Key Figures

$220,000 – Initial facility to pay entitlements
$1.1 million – Total liabilities at the outset
9-month – Loan term to enable property sale
100% – Creditor acceptance of SBR proposal

Avoiding a Fire Sale | How Funding Enabled a Successful Small Business Restructure

When a company director received a Director Penalty Notice (DPN) from the ATO totalling $550,000, time was suddenly in short supply. The company was also carrying $350,000 in other liabilities and owed a further $220,000 in outstanding employee entitlements – critically, those entitlements had to be paid in full before the company could even enter the Small Business Restructuring (SBR) process.

The directors were eager to resolve the situation, protect the business and avoid liquidation. However, accessing the capital needed to meet eligibility requirements for the SBR, particularly the payment of employee entitlements, was proving difficult. While they had assets, they needed time to realise them properly. One such asset was a holiday home, which was unencumbered but required months of preparation and marketing to achieve a fair sale price. The directors also had equity available in their primary residence, but it already had a first mortgage in place.

The entire process, from first contact to formal entry into the SBR, was completed in under six weeks.

The Solution: Strategic Funding in Two Key Stages

To navigate this challenge, a strategic plan was put in place involving the company’s accountant, an experienced SBR practitioner and Pretium Group.

Stage 1 – Funding to Qualify for SBR

To ensure the company stayed within the SBR threshold and was eligible to proceed, a new company was created solely for the purpose of borrowing the required funds. Pretium provided a $220,000 facility, secured by a first mortgage over the holiday home, with all fees and six months’ interest capitalised into the loan. This funding allowed the business to bring employee entitlements up to date.

With that hurdle cleared, the company was eligible to enter into a formal SBR process.

Stage 2 – A One-Off Payment to Creditors

Once the company had formally entered the SBR, creditors were offered a one-off, full and final lump sum payment as part of the restructuring plan. This offer was accepted, removing uncertainty and allowing for a quick, clean exit from the SBR process.

To fund the agreed plan, Pretium provided a second facility, this time secured by a second mortgage over the directors’ primary residence. The entire proposal—structured, funded, and executed in close collaboration with all parties—allowed the business to continue trading while delivering an acceptable return to creditors.

Outcome: Breathing Space and a Fresh Start

The Pretium facilities were provided for a 9-month term, giving the directors ample time to market and sell their holiday property at full value, rather than rushing into a fire sale. Pretium also introduced the directors to a finance broker to assist in refinancing both mortgages over the long term.

This case is a strong example of how targeted, short-term funding can support more meaningful outcomes during a restructuring process, benefiting all stakeholders involved. By stepping in at the right time, Pretium helped create the conditions for a practical, achievable restructuring plan that worked for both the business and its creditors.

“Without Pretium, we wouldn’t have had the time or the funding to do this properly. We would’ve lost everything.”

Quote from the Director

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SBR Funding That Made All the Difference