What types of businesses have we helped?
We can help.
We have helped thousands of businesses across Australia with debt and insolvency solutions. Businesses we help range from your local baker to a large construction company. Our debt solutions are suited for businesses in every industry.
Every business is different. Also, every solution is different. Our quality of service and dedication to developing the right solution for your needs is paramount.
Here are a few scenarios we have provided business debt and insolvency solutions for. Each identifies the debt issue, the considerations and our solution.
Scenario: A Construction Company
Debt Issue:
- The construction company owed $6.4 million in secured and unsecured debts.
- Employees were owed $40,000 in unpaid superannuation and entitlements.
- The company owed $1.1 million in tax.
Considerations:
- The Company undertook foundation and shoring, de-watering, excavation and civil works providing services ranging from design and construction to project management.
- Over three years, turnover had doubled, then in the year prior to appointment, turnover halved due to the general downturn of the global financial crisis (‘GFC’). The Company was unable to reduce the size of its operations and curtail its expenditure. And in line with the rate in which its income reduced, leading to significant losses being incurred.
- The Australian Taxation Office (‘ATO’) had issued a Director Penalty Notice (‘DPN’) given the size of the debt outstanding and commenced legal recovery proceedings for the debt.
- If the Company was placed into Liquidation, all projects were at risk of having their contracts terminated.
- The Company held a large number of equipment leases which would have resulted in the crystalisation of debts owing, by the company and the director personally, if the company was placed into liquidation and did not continue to trade.
Our Solution:
In our free consultation we discussed whether the director wanted to continue operating. We also considered the profitability of current projects and the impact of Liquidation on the business. It was important to consider the debt & insolvency solutions available to the director.
Based on the situation, a Voluntary Administration was the most suitable option for the company. This allowed the Company to:
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- free itself from any unprofitable contracts
- restructure its operations to establish an appropriate cost base for servicing its reduced income levels
- make an offer of return to creditors based upon future profits achieved.
Scenario: A Property Development Company
Debt Issue:
- The property developer built a small complex of townhouses. The Owners Corporation made a claim against the developer for defective and unsatisfactory building works in excess of $500,000.
Considerations:
- The Property Development company did not have sufficient assets to meet the claim.
- The property developer had taken out Home Building Compensation Fund (HBFC) cover (formerly known as Home Warranty Insurance).
- The Owners Corporation was not entitled to make a claim against the HBFC unless the property developer became insolvent.
Our Solution:
In our free consultation we discussed the impact of the claim on the company’s financial position. We also considered the debt & insolvency solutions available.
Based on this situation, a Creditors Voluntary Liquidation was the most suitable option for the company. This allowed the Owners Corporation to make a claim against the insurance cover. As well as rectification of the defective building works attended to.
Scenario: A Retail Business Affected by a Natural Disaster
Debt Issue:
A retailer of recreational goods was impacted by the 2019/20 fires. The business sustained significant interruption as a result of customers not being able to visit the store for a period of 4-6 weeks. This was during its peak trading period of Christmas and New Year.
The loss of sales translated into trading losses whereby the company debts began to mount.
Considerations:
- What insurance was in place to cover such business interruption.
- What does the future hold of the business and will it be able to recover from the impact of the interruption.
Our Solution:
In our free consultation we discussed the impact on the company’s financial position. We also considered the debt and insolvency solutions available to the client.
Based on this situation, a business turnaround management engagement was the most suitable option for the company.
This involved:
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- Preparation of a 3 way forecast, Balance Sheet, Profit & Loss and Cashflow to assess the ongoing sustainability of the business
- A review of the business insurance policy, formulation and submission of a claim, negotiating an outcome
- Sale of the business as a going concern
- Negotiating a settlement with secured creditors
- Preparation and submission of a Compromise Application form to the ATO as a result of the hardship incurred
Scenario: Recruitment and Labour Hire business
Debt Issue:
- The Company had a historical debt owing to the Australian Taxation Office (‘ATO’) in excess of $600,000.
- The Covid 19 Pandemic and associated lockdowns resulted in the business ceasing to operate effectively overnight.
- Whilst the stimulus allowed the business to maintain its employees in the meantime. The business was not generating sufficient profits to reduce the debt owing to the ATO.
- Given the period of time in which the debt had been outstanding, the ATO issued a notice that it was going to commence recovery proceedings.
Considerations:
- What does the future hold for the business coming out of Covid lockdowns.
- Is the business sustainable and will it trade profitably in the future.
- Does the business meet the eligibility criteria for a Small Business Restructuring Plan.
Our Solution:
In our free consultation we discussed whether the director wanted to continue operating.
Based on this situation, a Small Business Restructuring Plan was the most suitable option for the company. Creditors ultimately approved the partial repayment of their debt over a period of 3 years.
Scenario: Personal Liability for Company Debt
Debt Issue:
A large mining services business was placed into Voluntary Administration, then Deed of Company Arrangement (‘DOCA’). The DOCA provided for a return to unsecured creditors of 11 cents in the dollar.
A former Director was pursued for the balance of their debt by a number of suppliers who held personal guarantees.
The amount of the claims exceeded $2 million.
Considerations:
- What is the Asset and Liability position of the Director.
- Is it possible for the Director to propose a Personal Insolvency Agreement and would it provide a commercially acceptable return to creditors.
Our Solution:
In our free consultation we discussed the financial position and income earning capacity of the debtor.
Based on this situation, there was no option but for the Director to enter into Bankruptcy.
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We know taking the first step to call for help is not easy.
Our initial step in your consultation is to listen to best try and understand your situation. Your confidentiality is just as important to us as it is to you.
Our consultation also covers what your options are; the benefits, considerations, costs and expected outcomes of each option. Anything that you have disclosed to us during this consultation is kept completely confidential.
Find out what you should expect from our free consultation service. Speak to our business recovery and debt solutions experts today.