If engaged when a business is exhibiting the early stages of financial distress, or directors become concerned about the future viability of their business, our team can assist in providing a model for a business renewal and viability that all stakeholders can have confidence in.
We work with directors, financiers, accountants, lawyers, creditors and shareholders to work towards a positive outcome.
This can be achieved by way of a formal appointment – a Voluntary Administration, or through an informal turnaround plan between stakeholders, managed and overseen by us.
Voluntary Administration is a formal process where the directors of a company appoint an Administrator to take control of the business. The Administrator will liaise with all stakeholders to work towards a formal Deed of Company Arrangement (DoCA) being presented to creditors, at a meeting, for their approval.
The DoCA usually involves a compromise of debts owing or an increased timeframe for payment. It may also include a restructuring of the business.
Usually an arrangement with the business’ secured financiers is agreed to which can be either outside the DoCA or form part of the terms of the DoCA. All parties to the DoCA are bound by its terms, including unsecured creditors.
Unsecured creditors cannot pursue the company for a debt owed during the process. Personal Guarantees cannot be pursued until the company either enters into a DoCA or is liquidated.
As an alternative to a formal appointment, business owners can seek our assistance in offering an informal arrangement with creditors, including financiers. This may be negotiating a payment arrangement, a limited moratorium, a combination of these or some other arrangement – the aim is to provide the business with the means to improve or stabilise its viability whilst retaining a valued relationship with its creditors.
Small Business Restructuring
Small Business restructuring was introduced in January 2020, as part of the Government’s plan to assist companies in financial distress due to the impact of COVID-19.
It allows eligible companies to compromise their debts with agreement from their creditors with the aim of maximising the company’s viability.
It allows the directors of a Company to remain in control, during the restructuring period.
There is strict eligibility criteria that a company must meet to enable it to take advantage of small business restructuring.