Managed Insolvency and Liquidations

There will be some situations where a business of company cannot be saved. It will be a case of manning the lifeboat and preserving value.

There may also be a stage through the turnaround process where we need to exit an insolvent company or part of the business.

 

It's best when the process is managed proactively and cooperatively with the assistance of owners.

However knowing what motivates and how to deal with the various players involved enables us to formulate a strategic plan to get out with least pain. 

 

 

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Insolvent Trading. Important Legal Obligations

If you are a director and believe or suspect that the company is trading insolvent, then there a critical legal obligations that you must fulfil. Directors must prevent their company from incurring debts it is not able to pay. They are required to acknowledge their responsibility and take positive action when their is doubt as to its solvency.

 

If a director fails to prevent the company from incurring debts at a time when the company is insolvent, the director can become personally liable for the debts incurred.

 

It is essential that you have expert insolvency advise immediately. Our insolvency consultants offer a range of services associated with liquidation matters; voluntary administration, bankruptcy and the alternatives to bankruptcy.

It's important to understand its a legal process and there are associated penalties for non-compliance. Meaning you personal assets are at risk!

We will work on you behalf to proactively manage insolvency solutions with a view to preserving and protecting business value. Engaging specialist insolvency lawyers only when appropriate to do so.

 

Tax Debt. The 222 Director Penalty Notice

Tax debt has become a very serious matter in Australia. The ATO is aggressively pursuing 222 Director Penalty Notices. If you receive one, act fast... you have just 14 days!

 

As a director of a company it is essential that you are aware of, and act on any unpaid tax debts to avoid personal liability.

 

Be aware that the tax office can issue a demand that can see a director become personally liable for a company debt.

 

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Proactive Management
 

We will need to deal with a range of parties who take a stake in the outcome; secured lenders, unsecured creditors, petitioning creditors, employees, ATO, administrators, liquidators, trustees, insolvency practitioners, personal guarantors, lawyers etc).  There is an order of priority and they'll all be motivated to move to the top.

Managing insolvency may involve; 

  -  Advising distressed business stakeholders

  -  Negotiating with creditor  (important as this can solve many subsequent problems)

  -  Advising on insolvency practitioners (best fit for the situation)

  -  Assisting administration, liquidator  and preparing 'Deed of Company Arrangements'

  -  Advising independent directors

  -  Handling the ATO's 'Director Penalty Notice' 

  -  Managing debtors and facilitating collection

  -  Protecting and restructuring assets 

  -  Controlling creditors & agreements

  -  Restructuring the company

  -  Managing risks associated with process

  -  Managing personal bankruptcy 

Sometimes to save the business we have to exit the company. It may not be mismanagement, rather the external factors that means it cannot be saved. The 'business assets' are sold to another company entity. There are legal and moral obligations to deal with but most often it results in a cleaner rebuild.

The company will have assets and they will have to be disposed of correctly and swiftly.  If you try to cut corners or rip off the creditors the ASIC will prosecute you.  It is easier to do these things before the company is liquidated as once this happens you no longer have management control. There are ethical issues associated with staff entitlements and superannuation. Any personal guarantees need to be addressed particularly if there is any sale of the director's personal assets.

Providing the insolvency process is managed well, and there are no underlying issues, personal bankruptcy should not be on the agenda. Read More...

 

 

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