Services
A Voluntary Administration (VA) essentially puts a pause on debt recovery against a Company to give it an opportunity to trade through temporary cash flow issues. The process is commenced by a majority of the Company's directors, in certain circumstances a Liquidator, or a substantially secured creditor.
The entire VA process is relatively short and during it, Voluntary Administrators will take control of the Company to review and refine its performance and then provide written recommendations for its future. There are three outcomes of a VA being: -
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The execution of a Deed of Company Arrangement (DOCA);
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Liquidation; or
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The return of the Company to its directors if external involvement is no longer needed.
A DOCA is a legal agreement between creditors and the Company, where creditors agree to receive a pro-rata distribution (cents on the dollar) of the debt they are owed from a Company. Creditors generally accept a DOCA where the amount they receive in the alternative would be lower and generally over a longer period of time.
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The aim of the DOCA is to provide a future for the business of a Company including its staff, suppliers, customers, creditors, shareholders and directors.
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A DOCA can also involve a specialised Creditors Trust which has been successfully used in large restructuring matters here at mcleods accounting.
Liquidation is the procedure of formally shutting down a Company including selling all of its assets and paying the proceeds to creditors as a dividend. Shareholders, creditors and other stakeholders can place a Company into liquidation when it is unable to pay its debts, can no longer function properly or is no longer required to exist. There are various types of Liquidations available for different circumstances:-
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Members Voluntary Liquidation ("MVL")
A MVL provides for a Company or other incorporated entity to be wound up by its shareholders/ members where it is able to pay its debts in full. The process is the only formal way to end the existence of a corporate entity and can often provide tax effective solutions for the distribution of assets.
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Creditors Voluntary Liquidation ("CVL")
A CVL is commenced by shareholders of a Company where it is unable to pay its debts in full. Signs that directors should look out for include failing to stay up to date with taxation requirements, problems meeting employee or lease commitments, defaulting with financiers or receiving demands from creditors. A liquidator will investigate the history of the Company and the people involved in managing it and report their findings to creditors and the Australian Securities & Investments Commission. The process can help protect a director from personal exposure to Company debts and provide a trigger to activate the federal government scheme to deal with unpaid employee entitlements.
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A Simplified CVL is also available in certain circumstances including where the directors confirm that the Company owes less than $1 million in total to creditors and has made all of its taxation lodgments. Where the process is available there may be reduced costs due to the streamlined processes.
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Court Liquidation
This type of liquidation is commenced by an order of a Court being made for a creditor or other stakeholder seeking to recover money from a Company or otherwise claiming that the Company is no longer functioning properly. The mechanics of this liquidation are essentially the same as a Creditors Voluntary Liquidation. Directors and the Company’s registered office should be on the lookout for statutory demands or applications filed in a Court as these documents indicate that the Company is on the path to Court Liquidation. Should a Court decide to wind up the Company, the party seeking the order will nominate a Liquidator(s) of its choosing. The applicant will also seek its legal costs of the process be paid by the Company in the Liquidation.
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Provisional Liquidation
Where a Company is in the process of being wound up a Court the party seeking the winding up may feel that there is a threat that the Company's assets may be in danger or that there is some other urgency in having control of the Company pass to a Liquidator. In this scenario, the party may apply to the Court for the appointment of a Provisional Liquidator to preserve the assets of the Company. The role of the Provisional Liquidator is to maintain the Company's status quo rather than commence the liquidation of the Company's assets.
Privately Appointed Receiver
A Receiver (or Receiver and Manager) is engaged to act by a creditor that holds a security interest such as a mortgage or PPSR registration over some or substantially all of an entity’s assets. The Receiver is appointed to take possession and realise the assets of the borrower and repay as much as possible to the creditor.
The process does not stop other creditors from taking action to recovery their debts and simultaneous appointments of Voluntary Administrators or Liquidators and Receivers is common.
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Court Appointed Receiver
A Court appointed Receiver will be appointed by the Court on the application of an interested party. The Court appointed Receiver is appointed to do much the same role as a privately appointed receiver but is only empowered to the extent that the Court orders.
Bankruptcy, or Personal Insolvency, involves the appointment of a Registered Trustee to deal with an individual’s assets and debts. The process is aimed at giving individuals a fresh start with their financial affairs.
An individual facing unmanageable debts can take steps to declare themselves bankrupt by lodging a Debtors Petition. Alternatively, a creditor which is owed money may make an application to a Court via a Creditors Petition to make someone they are owed money from bankrupt.
Upon becoming bankrupt, a Trustee in Bankruptcy will take over and manage certain property and assets of the Bankrupt and handle their liabilities. The Trustee’s role is to sell certain assets and monitor income earned over various thresholds to raise money to pay all the creditors as much of the money they are owed as possible.
When a person is bankrupt, there may be some restrictions on their ability to travel overseas, or to work in certain professions. Bankruptcy usually lasts for three years, after which the person is discharged from bankruptcy. If all creditors debts are able to be paid in full, the Trustee can finalise the bankruptcy early or apply to creditors to finalise the matter for a lesser amount upon creditor approval.
There are also alternatives to going bankrupt including a person putting forward a Personal Insolvency Agreement, which involves less time and restrictions than bankruptcy but again requires creditor approval.
Providing assistance to businesses to reorganize and restructure to the satisfaction of management, lenders and providers of capital is our core skill. These assignments assess the current commercial and financial position of the business, evaluating its business viability, corporate and capital structure and cash resources.
This process can also include advising directors on actioning a plan to enact protections against insolvent trading such as Safe Harbour.
Small business restructuring (SBR)
The SBR process was introduced in 2021 as an alternative to other formal appointments such that a director can maintain control of a Company in a cheaper alternative to Voluntary Administration. There are a number of preconditions to the process being commenced including a requirement that the Company have all employee entitlements up to date, owe less than $1million to creditors and have all outstanding taxation lodgments up to date. Once directors agree that the Company is unable to pay its debts, a Restructuring Practitioner can be appointed to assist in developing a plan for creditors to consider and vote on to deal with debt. The process is streamline and provides a director time to consider the available options while retaining control of the Company and trading on.
Our forensic accounting services are summarised as follows:-
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Commercial Litigation
Pre-litigation support to provision of expert reports including:
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Preparation of Economic Loss Reports
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Assessment of Loss and Damage
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Assessment of Account of Profits
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Investigating Accountants Reviews
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Tracing and verification
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Business Interruption and disruption of business assessments
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Critical review of other Expert reports
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Expert Witness.
Family Law
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Valuation of businesses & enterprises including trusts, companies and partnerships.
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Critical review of other Expert reports
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Expert witness
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Assistance in property settlement matters with timely advice on accounting matters.
Estate Disputes
Providing expert support to assist legal professionals negotiate the accounting, business valuation and investigation challenges
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Assistance in compiling documents and requesting information
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Tracing assets and reconstruction of records
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Expert Reports
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Identifying assets, liabilities and income
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Equity Valuations
Insolvency
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Preparation of Independent Solvency Expert Reports
Business Valuation
Valuations of Business and various legal entities including companies, trusts and partnerships for a wide range of purposes including:
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Mergers and acquisitions
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Contractual or shareholder restructuring purposes
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Partnership & Shareholder disputes
