Pearce & Heers specialises in providing advice and assistance to insolvent companies and company directors. We provide a full range of formal and informal corporate insolvency services, including administering and assisting with the following:
We have assisted numerous company directors negotiate payment arrangements with the ATO, including in circumstances where the ATO has initially refused further payment arrangements prior to our involvement.
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A creditor who is owed over $2,000 can apply to Court to have a liquidator appointed to an insolvent company. We administer numerous court-appointed liquidations each year.
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The directors and shareholders of a company which cannot pay its debts may voluntarily appoint a liquidator to the company. We specialise in providing advice regarding and administering creditors’ voluntary liquidations.
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We have assisted numerous company directors negotiate payment arrangements with the ATO, including in circumstances where the ATO has initially refused further payment arrangements prior to our involvement.
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We assist companies settle debts which they owe or legal claims against them which they cannot pay. If successful, this results in a company avoiding liquidation or voluntary administration.
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A creditor with security over a company or its assets can (likely) appoint a Receiver to the company to collect and sell the assets which are subject to the creditor’s security.
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We provide advice, guidance and assistance to company directors in respect of strategies which can be implemented to turnaround a company’s business so that it may trade profitably in the future.
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A company’s directors can appoint an administrator to the company and put forward a proposal for a Deed of Company Arrangement to compromise creditors’ debts and avoid liquidation. We specialise in administering voluntary administrations and Deeds of Company Arrangement.
Find out more >A tax debt which gets out of control and is not subject to an ATO payment arrangement can result in the ATO:
It is important for companies which fall behind in payment of their tax obligations to be proactive in their dealings with the ATO. As if discussions are not commenced with the ATO regarding the manner in which tax debts may be settled, the ATO is more likely to take recovery action.
We assist company directors and their accountants deal with unmanageable tax debts. This includes, discussing risks associated with a company’s circumstances and formulating a manner in which to deal with the company’s problems. To deal with tax debts this includes negotiating ATO payment arrangements including getting the ATO to reduce interest and penalties which it has assessed.
We recommend that company directors are proactive in their dealings with the ATO, However, we also provide assistance to companies with significantly overdue tax debts and lodgement obligations. This includes where the ATO has already taken some form of recovery action.
We assist in negotiating numerous payment arrangements for companies with the ATO each year, however, some of the matters we have successfully dealt with in the past are as follows:-
If you wish to obtain advice or assistance regarding any of the above matters, please contact our Brisbane or Gold Coast office. Our experienced staff will be able to assist you.
A creditor who is owed over $2,000 by a company can apply to Court to have the company placed in liquidation.
The Court may also appoint a liquidator to a company as a result of an application made by a director or member (shareholder) of the company, the company itself, a provisional or voluntary liquidator, or the Australian Securities & Investments Commission.
The purpose of appointing a liquidator to an insolvent company is to have an independent and suitably qualified person take control of the company, investigate its affairs, determine whether any assets or funds may be available or recoverable to pay creditors and wind up the company in an orderly and fair way for the benefit of all creditors.
The liquidator of the company will determine the assets of the company (if any) and their value and take steps to realise any assets which are identified, if it is commercial to do so. In accordance with their duties, a liquidator will also conduct a review of the records and financial history of the company in order to investigate such things as:-
The liquidator will distribute the funds received from the realisation of a company’s assets, after payment of the liquidator’s costs, in accordance with the priorities set out in the Corporations Act 2001 (Cth), being generally:-
A company’s director has the same duties and obligations during the period of a liquidation as the director had prior to the liquidator’s appointment. In addition, a company’s director must:-
If you would like to obtain further general information regarding liquidation you may wish to access our Liquidation FAQ page.
If you are seeking advice regarding liquidation, please contact our Brisbane or Gold Coast office and our experienced staff will be able to assist you.
A creditors’ voluntary liquidation, is the term used to define the voluntary liquidation of an insolvent company.
A voluntary liquidation may occur either:
The liquidator of the company will determine the assets of the company (if any) and their value. He or she will then take steps to realise any assets which are identified, if it is commercial to do so. In accordance with their duties, a liquidator will also conduct a review of the records and financial history of the company in order to investigate such things as:
The liquidator will distribute the funds received from the realisation of a company’s assets, after payment of the liquidator’s costs. This is done in accordance with the priorities set out in the Corporations Act 2001 (Cth), being generally:
There are often benefits to arranging for a voluntary liquidation, including:
Where a company’s shareholders wish to arrange a voluntary liquidation, this can be done within a short period of time. The voluntary liquidation appointment is made by way of the shareholders signing a resolution for the liquidator’s appointment. Where we are engaged to assist with the process we will prepare this resolution and assist with further pre-appointment steps.
A company’s director has the same duties and obligations during the period of a liquidation as the director had prior to the liquidator’s appointment. In addition, a company’s director must:
If you would like to obtain further general information regarding liquidation you may wish to access our Liquidation FAQ page.
If you are seeking advice regarding voluntarily appointing a liquidator to a company, please contact our Brisbane or Gold Coast office. Our experienced staff will be able to assist you.
At Pearce & Heers we commonly provide pre insolvency advice and other assistance to company directors and individuals facing financial difficulties. Some of the areas in which we specialise in providing advice and assistance are:-
Pearce & Heers specialises in providing advice and assistance to accountants regarding their client’s financial affairs. We are often contacted by accountants whose clients are in financial difficulty who either want to generally discuss their client’s circumstances and issues or who may wish to arrange a meeting with us where we can formally review an individual or company’s position and discuss the options which may be available.
We will generally have an initial discussion or consultation with an accountant at no cost to their client and will be up front with any costs which we may charge for any additional or specific work which we may perform for their client in the future.
If you are the director of a company or an individual facing financial difficulty Pearce & Heers can review your circumstances and advise on options available, including any risks which may arise, future strategies and possible formal or informal insolvency appointments.
We can then, if necessary, either provide further assistance in dealing with financial problems or, should it be your desired course of action, administer a personal or corporate insolvency appointment.
Pearce & Heers provides pre insolvency advice to directors of insolvency companies regarding the liquidation process, matters that a liquidator will attend to and any risks associated with placing a company in liquidation. In circumstances where we provide advice to a director which we consider excludes us from acting as liquidators of a company we will, if required, assist the director in arrange for another insolvency practitioner from a third party firm to be appointed.
Pearce & Heers also provides pre insolvency advice to individuals who wish to file for bankruptcy. We can then assist individuals file Debtor’s Petitions either appointing trustees from Pearce & Heers or appointing the Official Trustee from the Australian Financial Security Authority.
We commonly assist company directors or bankrupts deal with issues which may arise with a third party liquidator or trustee who has been appointed. This may include:-
We have advised numerous company directors who have received director penalty notices regarding the options available to them, including placing the company in administration or liquidation, entering into a payment arrangement with the ATO, or other options for Director Penalty liabilities which cannot be avoided. Find out more.
We are experienced in conducting negotiations with the ATO regarding payment arrangements for individuals and companies and we negotiate numerous payment arrangements with the ATO each year.
We are often engaged by a company, commonly via its accountant, to review the company’s circumstances and provide either general or formal advice on the company’s current solvency and risks to its ongoing solvency. In circumstances where we take on such an engagement we can also advise company directors in relation to future strategies which may be implemented to improve a company’s financial performance or deal with creditor claims which a company cannot immediately pay.
Pearce & Heers can provide general advice and assistance to companies or individuals who are subject to large claims by creditors which they cannot pay. This will generally involve us reviewing relevant circumstances and financial information and determining a strategy which may seeking to negotiate an informal settlement or payment arrangement or assisting an individual file for bankruptcy or a director place a company into liquidation.
In circumstances where a creditor has taken formal recovery action by issuing a company with a Statutory Demand and possibly subsequently a Winding up Application, Pearce & Heers can also provide assistance with reviewing a company’s financial position, considering risks to the company’s director and formulating a strategy to deal with the claim being pursued. Such a strategy may include seeking to negotiate a payment arrangement such that the creditor adjourns or withdraws the Winding up Application, appointing a voluntary administrator, or letting the company be wound up if there is limited or no prospect of the company continuing trading.
If you are seeking advice or assistance regarding Director Penalty Notices, please contact our Brisbane or Gold Coast office for an initial obligation free consultation.
In some circumstances individuals or companies that are unable to pay all amounts which they owe to creditors may be able to negotiate debt settlements or arrangements with some or all of their creditors in order to avoid bankruptcy or liquidation.
Pearce & Heers specialises in assisting to negotiate these types of debt settlements and informal arrangements. The approach we commonly adopt is we provide creditors with a full summary of an individual’s or company’s financial position often with an estimate of the position should that party enter into a formal insolvency appointment, which assists creditors understand that a person or company cannot pay their debt in full. We will then generally make an offer of settlement to creditors on that person’s or company’s behalf and subsequently liaise with their creditors regarding the offer, any counter-offer received and if negotiations are successful in preparation of a settlement agreement.
When creditors understand an entity’s financial position and the prospects of recovery should that entity enter into a formal insolvency appointment, they may often be open to negotiating a settlement of their debt for a lower amount, reducing the interest on their debt for a period, or allowing deferred payment of their debt.
Informal arrangements can be proposed quickly and efficiently, however they require acceptance of the proposed settlement offer by each of a person’s or company’s creditors (or possibly the vast majority of creditors) to be successful. If one or more creditors reject a proposed offer the informal arrangement may not be able to proceed. Consequently, proposing such arrangements is more difficult as the number of creditors increases.
Additionally it is generally more likely for this process to be successful if a person or company is able to make an offer to creditors for a significant portion of their debts, although this may not always be necessary.
In considering whether to undertake this process, company directors and individuals must be aware that not all such informal matters will result in a successful outcome, however, it may be a better strategy than an immediate formal insolvency appointment.
If you would like to discuss the options available to you, including negotiating informal settlement arrangements, please contact us for an initial obligation free consultation.
We are often approached by individuals or companies that are subject to legal claims or proceedings, or those parties’ solicitors, in circumstances where the individual or company is unable to continue funding the litigation or meet the amount of any judgment which has been obtained or which may be obtained in the future.
Pearce & Heers specialises in assisting individuals and companies resolve litigation and disputes with a commercially-minded approach, which may often benefit both parties to the dispute. As with the negotiation of general informal arrangements with creditors, we commonly do this by providing the other side to a dispute with a summary of an entitles financial position, along with details of any estimated future costs to that entity of defending claims against it and a summary of estimated outcomes should the entity we are acting for be forced to make a formal insolvency appointment.
Whilst there is obviously no certainty of achieving a settlement through this process it provides a further option for parties who are subject to litigation to consider in circumstances where they cannot afford to continue to fund the litigation or meet the amount of any claim against them and it may result in settlement of disputes on commercial terms.
We have recently successfully assisted numerous individuals and companies enter into informal arrangements and settlements with their creditors, including in respect of the following matters:
If you are seeking advice or assistance regarding these types of matters please contact our Brisbane or Gold Coast office for an initial obligation free consultation.
The most common type of receivership is where a secured creditor appoints a third party as receiver or receiver and manager of a company or its assets. A receiver may also be appointed to a company by the Court, however, these types of appointment are much less common.
This information relates to appointments of receivers made by secured creditors.
A secured creditor can appoint a receiver to a company pursuant to a security agreement between the company and the secured creditor, which provides the secured creditor with security over some or all of the company’s assets. A receiver can only be appointed by a secured creditor to those assets over which the secured creditor holds security.
A receiver appointed to a company will generally:-
The funds recovered by a Receiver will, after payment of the receiver’s costs, be distributed as follows:-
Any surplus available to a receiver after paying the above required amounts in full will then be available to be paid to the company or a liquidator of the company if one has been appointed. There is generally no other obligation or requirement of a receiver to use or make a company’s funds available to pay amounts owed to ordinary unsecured creditors whose debts were incurred prior to the receiver’s appointment.
A company’s director has the same duties and obligations during the period of a receivership as the director had prior to the receiver’s appointment. In addition, a company’s director must provide a receiver with a Report as to Affairs for the company, all of the company’s books and records which are subject to the receiver’s appointment and the director must reasonably assist the receiver in carrying out his or her role.
A receivership will end when the receiver resigns from his or her appointment or the appointment is finalised by the secured creditor. This will generally occur when the receiver has realised sufficient funds to pay the secured creditor in full or has realised all assets of the company subject to the receiver’s appointment which are commercially warranted to realise. Upon the finalisation of a receivership control of the company will return to the director(s) unless a liquidator or administrator has been appointed to the company.
If you are seeking advice regarding receivership or if you wish to discuss appointing any of the qualified staff members at Pearce & Heers as receiver please contact our Brisbane or Gold Coast office and our experienced staff will be able to assist you.
Many business owners do not know the break-even point for their business and do not adequately focus on the key drivers of profitability. This is a significant opportunity for consulting work for accountants to assist directors with:
We provide advice, guidance and assistance to accountants and company directors in respect of strategies which can be implemented to turnaround a company’s business so that it may trade profitably in the future.
In some circumstances we may also be able to assist businesses in negotiating arrangements so that debts owed to creditors may be paid over time or coming to arrangements with creditors to compromise their debts. Such arrangements can assist a business with immediate cash flow problems by reducing or deferring current liabilities.
An insolvent company may agree to sell its business to another entity with the insolvent company to then be placed into liquidation at some point in the future. Such a sale may either be on the open market, if possible, or to a new entity, which may be related. If the sale is to a related entity then the sale ought to focus on a company’s core business / assets with a view to the new purchasing entity being in a position to trade profitably.
In any sale of a business or assets a company’s directors must comply with their duties, which include acting in the best interests of the company and all stakeholders. Where a company cannot pay its debts, directors’ duties also include having regard to and acting in the best interests of the creditors. To ensure compliance with a director’s duties, any sale of a company’s business and assets ought to be entered into for fair value and on commercial terms. This is particularly important in circumstances where a sale to a related entity will not enable all debts of the company to be paid and it is likely that the company will be placed in liquidation at some point in the future.
If a sale is not transacted for fair value and on commercial terms it may disadvantage creditors and give rise to breaches of director’s duties, recovery claims by a liquidator and offences being reported to the ASIC, which may subsequently prosecute directors. This conduct is commonly referred to as “illegal phoenix activity”, however, the ASIC recognises that there is a distinction between “legal” and “illegal” phoenix activity depending on whether the issues of value and commerciality are adequately addressed in the sale. Accordingly, proper legal and accounting advice ought to be obtained to ensure that sale arrangements are properly structured and do not give rise to “illegal phoenix activity”. In this regard there has recently been a significant growth in the number of “fringe advisers” who provide advice regarding financial difficulties but are not qualified insolvency practitioners and are unregulated. Certain of these advisers have been associated with “illegal phoenix activity” and this issue is under scrutiny from the ASIC and the ATO which are looking to pursue prosecutions in this area.
The benefits of a sale of business to a related entity may include the directors maintaining control of the business rather than an administrator or liquidator taking control, continuity of the business in the transmission to the purchaser and the directors have the opportunity to communicate and manage dealings with clients, employees, suppliers and financiers.
There are a number of issues to be addressed in a sale of a business including:
If you are seeking advice or assistance regarding this matter please contact our Brisbane or Gold Coast office for an initial obligation free consultation.
Voluntary administration is a means of avoiding liquidation of a company.
The directors of a company which is insolvent, or is about to become insolvent, may appoint an administrator to the company. An administrator may also be appointed by a liquidator or provisional liquidator of the company or by a secured creditor who holds security over most of the company’s property (although such appointments are uncommon).
The objective of voluntary administration is generally to allow a company to continue trading and to enable its business, property and affairs to be administered in a way that maximises the chances of the company continuing in existence.
Administration is a temporary phase during which the administrator is in control of the company’s affairs. The administrator conducts investigations and issues a report to creditors regarding the options of placing the company in liquidation or accepting a proposal for a Deed of Company Arrangement (“DOCA“) to settle debts and return control of the company to the directors. A meeting of creditors is held within 25 business days (5 weeks) of the appointment at which creditors vote on whether to place the company in liquidation or accept a proposal for a DOCA (there is a third option to simply end the administration and return the company to the control of the directors but this is rare).
A proposal for a DOCA may include various terms, however, generally a proposal will seek to provide for a better return to creditors than that which will be available in the liquidation of the company through:
If a proposal for a DOCA is accepted by a majority in number and value of creditors, at a meeting convened by the administrator to consider approving the proposal, it is binding on all of the company’s unsecured creditors and the company may be able to continue trading.
There may be benefits in arranging for the appointment of an administrator to a company, including:
There may also be possible issues or problems associated with the appointment of an administrator to a company, including:
If you are seeking advice regarding voluntary administration and DOCAS, please contact our Brisbane or Gold Coast office and our experienced staff will be able to assist you.
Our team looks at our client’s entire financial picture from an insolvency expert’s perspective to identify opportunities to resolve financial difficulties so liquidation can be avoided.
While we do everything possible to help a client avoid liquidation, sometimes that’s the only viable option. We are experts in administering formal insolvency appointments and ensure every detail is handled professionally.
We understand financial difficulties are stressful. That’s why the Pearce & Heers team makes every effort to use their knowledge, qualifications, experience and a positive approach to make the process as stress-free as possible.
Our goal is to minimise the impact of insolvency and to make the process as easy as possible for our clients. We are always professional, discreet, efficient and handle every situation with the utmost respect for our clients and those with whom they do business.
After doing a detailed financial analysis and presenting all possible solutions, we factor in the client’s goals and financial needs to decide upon the best course of action to try to minimise negative outcomes.
We care about our clients’ circumstances and results, we always act honestly and with integrity and we will always tell things as they are even if it is not what a client wants to hear.
Because we focus on what’s best for our clients and offer a full range of advisory services few insolvency accountants offer, we’ve been able to get more favorable results for those who entrust us with their, or their clients’, financial challenges.
If you’re feeling overwhelmed by your company’s financial problems, it’s time to get help. We will explore all options available with you and guide you every step of the way.