Case Study: Small Business Restructure (SBR) Helps Avoid Director Penalty Notice (DPN) Disaster

It started with a casual chat, a coffee with a referrer, who was working with one of their clients.

Like many businesses, they’d had a rough few years. Despite improved trade, the business had fallen behind on its BAS lodgements and owed over $650,000 in PAYG and GST!

The referrer was discussing how hard it had been get the ATO to agree to a payment plan for the debt, which they had finally achieved a few days earlier, at $27,000 a month for 2 years. Confident things were back on track and the payment plan sorted, the business owners were getting on with the day to day operations.

Then the referrer said:

“They also received a few DPNs 2 weeks ago — but the ATO told them the payment plan covers that.”

That one sentence changed everything.

What the directors didn’t know could have cost them everything

We got in touch with the directors immediately — a husband and wife team who had built their business from the ground up. Like many directors, they had no idea how Director Penalty Notices (DPNs) worked — or the serious personal risks they carried.

They were genuinely shocked to learn:

Director Penalty Notices (DPNs) make the Directors personally liable for the company’s tax debt.
The ATO payment plan did not remit the personal liability under the DPNs.
Their family home was now at risk. It the payment plan failed at a later date there would be no way to remit the Director Penalty Notices.

Understandably, they thought the payment plan had resolved everything. But the Director Penalty Notices (DPNs) told a different story — As non-lockdown DPNs a 21-day clock was ticking.

Our Response: A Strategic, Timely Small Business Restructure

Time was critical, 14 days had already passed. We immediately assessed the company’s position and confirmed it met the eligibility criteria for a Small Business Restructure (SBR).

From there, Resolv led the process end-to-end:

We worked closely with the directors to understand the financials and formulate a viable restructuring plan.
We prepared the company for the Small Business Restructuring (SBR) process, gathering the necessary documents and communicating with key suppliers
We formally appointed a Small Business Restructuring Practitioner within the 21-day DPN period.
We guided the directors through every step, helping them stay informed and in control — while minimising stress during a highly pressured time.

The directors were committed and proactive, which made a real difference. With our support, they were able to present a plan that was realistic, fair, and positioned the business to recover.

The Outcome

The restructuring plan was accepted — and the results were significant:

✅ A 70% reduction in the ATO debt
✅ A 2 year SBR plan at $8,300 per month - nearly $19,000 extra cash flow per month compared to the payment plan
✅ The DPNs were remitted in full, removing personal liability
✅ Their family home was protected and no longer exposed
✅ The business remained open, retaining its team and reputation
✅ The directors regained control and clarity about their future

The Takeaway

This case highlights a few key lessons for directors — their accountants and advisers supporting them:

ATO payment plans don’t remove DPN liability. Even if a company enters a plan, the director will still be personally exposed.
Timing is critical. Non-lockdown DPNs come with a 21-day window to act. After that, the liability becomes fixed.
The SBR process works. It offers a path to survival — but only if used early and correctly.
SBR can have huge cashflow benefits. In this case the SBR reduced the Company's monthly commitment from $27,000 to $8,300 per month.
The right advice matters. One conversation — in this case, a casual comment from an referrer — triggered the right response at the right time.

Insights