Case Study: Successful Small Business Restructure for Civil Earthmoving Company

INDUSTRY:                                                         Civil Earthmoving

DEBT:                                                                   $871,035

PLAN OF ACTION:                                            Small Business Restructure

Background

Established in December 2014, this New South Wales-based civil earthmoving company specialises in land development, site preparation, and earthmoving services. Facing substantial financial challenges, the business struggled due to:

• Economic downturn
• Loss of key clients
• Delays in recovering debtors
• Increased operational costs
• Impacts of COVID-19 and subsequent floods in NSW

Core problem

The business urgently needed a turnaround and with a poor compliance history and substantial overdue ATO lodgements, there was significant risk of closure. Rapsey Griffiths’ engaged with the ATO to negotiate an adjournment on the winding-up application, allowing time to develop and present a viable restructuring plan to creditors.

Rapsey Griffiths’ collaborated with the company’s director, accountant, bookkeeper, and finance broker to develop a plan that would address debt issues, maintain operational stability, and secure the future of the business.

The solution

Rapsey Griffiths’ identified a Small Business Restructuring (SBR) plan as the optimal solution, given its potential to retain value and control for the directors. Key benefits of the SBR process included:

• Director Control: Directors retained control over daily operations, with oversight from the SBR Practitioner.
• Business Continuity: The company continued trading under the directors’ guidance.
• Fixed-Fee Structure: The restructuring was conducted at a fixed fee, providing cost predictability.
• Liability Mitigation: The SBR process helped protect directors from personal liability under non-lockdown Director Penalty Notices.

Together with the business’s team, Rapsey Griffiths’ implemented several strategies to strengthen the company:

• Cost Reductions: Daily expense monitoring and elimination of non-essential costs.
• Employee Retention Programs: Flexible working options and training to improve workforce stability and productivity.
• Customer Engagement: Boosted marketing efforts and improved customer service.
• Collaborations: Partnerships with other businesses to offer tailored client solutions.

The Restructuring Plan and Financial Contributions

The outcome – a positive turnaround

With Rapsey Griffiths’ support, the company’s restructuring proposal received approval, providing a lifeline for the business. The results included:

• A $609,201 improvement in the company’s balance sheet
• Employee Job Security: Employees retained their positions, boosting morale.
• Stakeholder Satisfaction: Directors and shareholders experienced significant stress relief, and customers and creditors showed support for the recovery plan.
• ATO and Creditor Engagement: The ongoing engagement with the ATO and creditors was essential to securing the company’s future and ensuring compliance moving forward.

The civil earthmoving business emerged with a clear path forward, a strengthened balance sheet, and renewed stability. This outcome emphasises the effectiveness of the Small Business Restructure strategy for struggling businesses. For accountants and advisors, this case demonstrates how restructuring can be a highly effective solution for clients facing similar challenges—leading to recovery and sustained success.

For more information on the SBR process and a complimentary guide to small business restructuring, visit Rapsey Griffiths https://rapseygriffiths.com.au/.