Company directors are often reluctant to speak to an insolvency practitioner (IP) for various reasons. These include:

• A reluctance by directors to accept the difficult reality they are facing;
• The mistaken belief that IPs should only be consulted when the business is at the point of insolvency and they are ready to liquidate;
• The perception that an IP’s job is only to liquidate a business; or
• The general stigma surrounding the consulting of an IP.

Why should you speak to an Insolvency Professional?

While formal appointments like liquidations and voluntary administrations can only be administered by a registered liquidator, IPs, which include registered liquidators, can provide services beyond formal appointments.

IPs are professionally trained and experienced in identifying various issues facing a company that a director may not be aware of. An IP can assist in reviewing your company’s financial position and providing advice on how to deal with issues, if necessary.

Apart from formal appointments, some other options available to a financially distressed company include:

• Negotiating a debt reduction or settlement with creditors. It may include payment of a reduced sum, or payment by instalments, or both;
• Negotiating or restructuring the business’ finance arrangements;
• Restructuring and turning the business around, including carrying out a sale of business; or
• A combination of both formal and informal appointments.

Further, an IP can also provide advice to directors themselves on the risks of personal liability as a director and ways to minimise such risks, including director penalty notices and potential claims for personal guarantees or insolvent trading.

When should you speak to an IP? 

The sooner, the better.

If there are issues facing your business, early detection is key to avoid further problems. Consulting an IP early may provide more options to you as a director to avoid liquidating your business. 

Contact for assistance

If you wish to discuss the contents of this article or the circumstances of your business, contact Pearce & Heers for a free no obligation discussion. Pearce & Heers is led by a team of professionals with over 25 years of experience in assisting directors and business owners. The partners include Registered Liquidators, members of the Australian Restructuring Insolvency and Turnaround Association (ARITA) and the Chartered Accountants Australia & New Zealand (CAANZ).