Australian restaurants and hospitality operators are increasingly turning to debt restructuring programs to survive financial distress, with the accommodation and foodservice sector accounting for nearly a quarter of all small business restructuring appointments over the past two years.
Data from the Australian Securities and Investments Commission (ASIC) shows 23% of the 3,388 small business restructuring (SBR) appointments between July 2022 and December 2024 came from the accommodation and foodservice industry, making it the second-largest user of the debt restructuring program behind construction companies at 27%.
The surge represents a dramatic shift in how struggling restaurant operators are handling financial difficulties. SBR appointments have grown from just 82 cases in the program’s first 18 months to more than 3,000 expected appointments in the current fiscal year.
“After a slow start, the recent growth of SBRs shows that the regime is starting to deliver on helping small businesses survive,” said ASIC Commissioner Kate O’Rourke in announcing the numbers.
The small business restructuring process, introduced in 2021, allows directors of struggling companies to negotiate with creditors while maintaining control of their operations—a critical factor for restaurant operators who need to continue serving customers during the restructuring process.
Of the restaurant and foodservice companies that entered restructuring, the majority successfully transitioned to formal restructuring plans.
The program has generated significant financial relief, with more than $100 million distributed to unsecured creditors from completed restructuring plans. However, approximately 87% of these payments went to the Australian Taxation Office, highlighting the role of tax debt in driving many small businesses toward restructuring.
The median cost of the restructuring process across all industries remained stable at around $22,000, making it a more affordable alternative for restaurant operators compared to traditional insolvency proceedings that can cost significantly more and often result in business closure.
The data suggests that many restaurants are successfully using the restructuring process to negotiate manageable payment terms with landlords, suppliers, and tax authorities while continuing to operate—a scenario that would be impossible under traditional liquidation proceedings.
ASIC noted it has not found evidence of widespread misuse of the restructuring process, despite initial concerns from some industry stakeholders. The commission continues to monitor the program’s effectiveness as appointment numbers are projected to reach 3,000 in the current fiscal year.
