Reducing the Impact of Financial Distress through the implementation of a Specific Action Plan.
Company Directors sometimes may be unaware of their statutory obligations under the Corporations Act regarding the financial management of their company, particularly in circumstances where it may be insolvent or likely to become insolvent. The situation can get worse when corrective action is not taken within the required timeframe. Failure to do can expose you to needless financial risk which may sometimes be easily avoided.
Companies entering a cycle of financial distress often consider several other avenues or solutions before getting professional advice from qualified and registered insolvency specialists. Often with disastrous results. That’s why it’s important to seek the advice of experts with demonstrated results in helping other businesses emerge from financial crisis.
There are many types of external administration to consider when evaluating the best option for the company and stakeholders. Jones Partners has a depth of experience in all types of corporate insolvency as well as bankruptcy and we are in a position to take control and help you navigate through the financial crisis.
Here are many of the options which may be available to you through corporate financial advisory services:Voluntary Administration
How it Works
The main purpose of a Voluntary Administration is to provide a company with a viable alternative to winding up by restructuring its financial affairs. Sometimes however a Voluntary Administration may also be considered where there are other concerns such as the maximisation of the asset values of a company. This typically occurs in circumstances where any unreasonable delay will result in a significant reduction of the asset values, thereby impacting the return to creditors.
- The main advantage of this type of appointment is the expediency with which it can be implemented. The directors are able to effect the appointment immediately upon resolving that the company is insolvent or likely to become insolvent.
- The directors also have the flexibility to consider making a proposal to creditors dealing with the restructuring plan for the company and an arrangement as to how it plans to repay or compromise its debts.
- There is a moratorium on any outstanding debts, except for secured creditors. These measures provide directors with "breathing space" to focus on the most effective means of resolving the company’s financial problems.
- It provides an opportunity for the business to continue trading in the future and allows for a greater return to creditors than would otherwise be possible. Alternatively this form of administration can also enable the assets to be realised in a manner which maximises realisations for creditors.
How it Works
The purpose of a Deed of Company Arrangement is to formalise a proposal made by the directors during the Voluntary Administration, which has been ratified by creditors. A Deed of Company Arrangement is a legally binding document between the company, its creditors and the Administrator.
- It allows the implementation of a revised business plan and strategy to return the business to profitable trading.
- It offers a higher degree of flexibility. The form and content of the Deed of Company Arrangement can be composed in any manner the company wishes, subject to approval by creditors.
- It provides a greater return to creditors than would otherwise be available if the company were placed into liquidation.
Jones Partners have acted as Deed Administrator for many companies where we have worked with the company to see business profitability restored and creditors receiving substantially more than they would have otherwise received.
How it Works
This approach consists of winding up the affairs of the company where the directors and shareholders have determined that due to the insolvency of the business they no longer wish to continue trading. A Creditors Voluntary Liquidation may also eventuate where a company has been placed into Voluntary Administration and a proposal for a Deed of Company Arrangement has not been accepted by creditors.
- The appointment is made voluntarily by the directors and shareholders.
- The appointment can be made expeditiously where the appropriate notice period is otherwise waived by the required majority of shareholders.
Allows for an independent insolvency practitioner to investigate the affairs of the company and:
- make recoveries of voidable transactions under “claw-back” provisions
- realise company assets and
- make a distribution to creditors in accordance with the Corporations Act.
Michael Jones, Bruce Gleeson, David Shannon and Daniel Soire are Registered Liquidators and can carefully evaluate whether voluntary liquidation is the "right option" in the circumstances.
How it Works
The financial affairs of an insolvent company are wound up by way of an application to the Court. The most common reason why a company is wound up by the Court is because it has failed to comply with the demands of an unsecured creditor.
- It provides creditors with a mechanism to wind up companies who have not paid their debts.
- It enables the Official Liquidator to take possession and control of the company’s assets for the purpose of realising the maximum amount for creditors.
- The Official Liquidator has the power to investigate the company’s affairs to determine if there are any further assets to be realised or alternative action that may be required. Such action can result in public examinations, trading whilst insolvent actions and voidable transaction recoveries.
Michael Jones, Bruce Gleeson, David Shannon and Daniel Soire are Official Liquidators and regularly appointed to these types of external administrations.
How it Works
This special form of Court appointed Liquidator is typically used in instances where there is an urgency or concern for the protection of company assets. It may not be necessary for the company to be wound up because it is insolvent. Although in frequent, it is also possible for the company to be returned to the directors’ care. The appointment is usually made on the application of a creditor, shareholder or director.
- The Provisional Liquidator takes possession and control of the assets and affairs of the company. Assets that are in danger are therefore secured.
- It allows for an investigation of the company’s affairs to be conducted and the results reported to the Court. The Court may then appoint an Official Liquidator or return the control of the company to the directors.
How it Works
A Receiver (or Receiver and Manager, Controller or Agent for the Mortgagee) is usually appointed to recover funds owing to a secured creditor such as a bank or other financier. A Receiver can also be appointed by the Court in special circumstances. The appointment is actioned by the secured creditor pursuant to the provisions of its charge or mortgage document.
A Receiver can either continue to trade-on the business or realise some or all of the company’s assets to repay the secured creditor depending on the nature of their appointment.
- A secured creditor is able to recover their debt whereupon the Receiver would then typically retire (cease actions) from any further conduct on the matter.
So call us now on +61 2 9251 5222 or click here to arrange an obligation free discussion and we’ll help fast-track an assessment of your position and the "right options".
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South West Sydney
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NARELLAN NSW 2567
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