At Pearce & Heers we commonly provide pre insolvency advice and other assistance to directors of companies facing financial difficulties. Some areas we specialise in are as follows.
Meetings, Discussions and Advice on Options Available
If you are the director of a company facing financial difficulties we can review your circumstances and advise on options available, including any risks which may arise, future strategies and possible formal or informal insolvency appointments. Some of the options available to deal with company debt problems are:
- Small Business Restructuring.
- Liquidation.
- Negotiating debt settlements.
- Negotiating payment arrangements including for ATO debts.
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 corporate insolvency appointment.
Pre Insolvency Advice and Assistance
We provide pre insolvency advice to directors of insolvent 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 can:
- Assist the director to arrange for another insolvency practitioner from a third party firm to be appointed; and
- Help the director deal with the insolvency practitioner appointed including responding to any issues or legal claims.
Post Liquidation Advice and Assistance
We commonly assist company directors deal with issues which may arise with a third party liquidator who has been appointed. This may include:
- Assisting with preparation of required statutory documents such as Reports on Company Activities and Property and Summaries of Affairs;
- Providing advice and assistance in conducting meetings with a liquidator or providing information and documents to a liquidator;
- Reviewing claims being pursued and considering strategies; and
- Assisting with the resolution of claims or issues which may be brought or raised.
Safe Harbour
A company can implement processes so that can rely on the Safe Harbour provisions inSection 588GA of the Corporations Act 2001 (Cth). If implemented properly Safe Harbour can be relied upon as a defence to any future insolvent trading claim should a company be placed in liquidation. We can assist directors implement Safe Harbour procedures including providing information regarding or assisting the following required matters:
- Maintaining proper books and records.
- The requirement to pay employee entitlements and make required tax lodgements.
- Providing necessary business strategy and turnaround advice.
- Developing and implementing a viable business turnaround plan.
Solvency Reviews
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.
Company Restructures and Business Sales
In certain appropriate circumstances we are able to assist directors of insolvent companies transfer business assets to related entities by way of a business sale so that the business can be traded by the new entity and the old entity will enter some form of insolvency appointment. This is commonly referred to as a phoenix arrangement and if not done properly can result in legal claims being pursued and in some cases regulatory action by ASIC. However, business sales can be conducted in these circumstances if done properly and in accordance with a director’s duties and this is something we can assist with. This is recognised by ASIC in their webpage on illegal phoenix activity which provides:
Not all company failures involve illegal phoenix activity, as genuine company failures do occur. Where a director has responsibly managed a company and it subsequently fails, they can operate the same business using another company without engaging in illegal phoenix activity. This is often referred to as a ‘company restructure’.
A responsibly managed company means the director has complied with their legal obligations and acted in the best interest of the company and its creditors. When a company restructure involves transferring assets to a new company, acting responsibly could mean having the assets independently valued to determine their true market value and the new company pays that value. Where a company is a small business, directors may enter into a restructuring by appointing a restructuring practitioner.
Negotiations with Creditors Regarding Debts or Claims
We 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 be seeking to negotiate an informal settlement or payment arrangement or in some cases an insolvency appointment to resolve claims.
Assisting with Statutory Demands and Winding Up Applications
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, we 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, entering into Small Business Restructuring or letting the company be wound up if there is limited or no prospect of the company continuing trading.
Director Penalty Notices
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 or appointing a Small Business Restructuring Practitioner, entering into a payment arrangement with the ATO, or other options for Director Penalty liabilities which cannot be avoided.
Negotiations with the Australian Taxation Office
We are experienced in conducting negotiations with the ATO regarding payment arrangements for companies and we negotiate numerous payment arrangements with the ATO each year. In some circumstances this can also involve a request being made to the ATO for the remission of general interest charge.
Advice and Assistance to Accountants
We specialise 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 a 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.
Further Information and Assistance
As set out above we provide a vast range of services for companies which are in financial difficulty. So, if you are seeking advice or assistance regarding your company, please contact our Brisbane or Gold Coast office for an initial obligation free consultation.
