The downward spiral of company insolvency

The downward spiral of company insolvency

Stages of small to medium size business insolvency and how professional advisers can help the directors at each stage of downward trajectory.

Crisis

Stages of small to medium size business insolvency and how professional advisers can help the directors at each stage of downward trajectory.

The downward spiral of company insolvency - Crisis

Symptoms and signs ▶︎ Diagnosis and treatment

Poor current ratio – working capital deficiency (accounting) ▶︎ Document and advise upon safe harbour action and develop a turnaround strategy

Losing an important customer or operational disaster (strategic) ▶︎ Consult with directors to initiate safe harbour action and develop a turnaround strategy

Management deadlock (people) ▶︎ Mediating and documenting board decisions to restore stakeholder confidence

Large project draining cash (operations) ▶︎ Terminating unsustainable projects or contracts and strategic planning

Crisis

Stages of small to medium size business insolvency and how professional advisers can help the directors at each stage of downward trajectory.

The downward spiral of company insolvency - Crisis

Symptoms and signs ▶︎ Diagnosis and treatment

Director sickness or burnout (people) ▶︎ Placing and overseeing management to ensure continuity

Fraud by employee/business partner ▶︎ Represent owners/directors in recovery action

Constraints and change issues (strategic) ▶︎ Consult with directors

Founding

Stages of small to medium size business insolvency and how professional advisers can help the directors at each stage of downward trajectory.

The downward spiral of company insolvency -  Founding

Symptoms and signs ▶︎ Diagnosis and treatment

Cash flow forecast predicts shortfall (accounting) ▶︎ Obtain further working capital (debt or equity)

Trading terms with suppliers deteriorate (strategic) ▶︎ Renegotiate trading terms with suppliers

Unpaid taxes (debt) ▶︎ Negotiate instalment arrangement with ATO

Downsize

Stages of small to medium size business insolvency and how professional advisers can help the directors at each stage of downward trajectory.

The downward spiral of company insolvency - Downsize

Symptoms and signs ▶︎ Diagnosis and treatment

Overhead burden too high (accounting) ▶︎ Terminate contracts and employees

Unrealistic revenue target (strategic) ▶︎ Develop and implement management obiectives

Poor corporate structure (legal) ▶︎ Create optimal business structure through new contracts, companies and/or trusts

Salvage

Stages of small to medium size business insolvency and how professional advisers can help the directors at each stage of downward trajectory.

The downward spiral of company insolvency -  Salvage

Symptoms and signs ▶︎ Diagnosis and treatment

Operational turnaround too difficult (accounting) ▶︎ Develop restructure plan to protect goodwill value of business

Execute pre-pack insolvency arrangement or sale (transfer of assets) ▶︎ Advise on transaction that involves business or asset transfers

Pre-liquidation issues (legal) ▶︎ Advise on antecedent transactions and risks to directors from a liquidation

Liquidate

Stages of small to medium size business insolvency and how professional advisers can help the directors at each stage of downward trajectory.

The downward spiral of company insolvency - Liquidate

Symptoms and signs ▶︎ Diagnosis and treatment

Appoint liquidator or voluntary administrator (legal) ▶︎ Oversee process and liaise with insolvency practitioner

Personal quarantees called in (legal) ▶︎ Negotiate personal quarantee paments with creditors

Fall-out from creditors and continuing suppliers (legal) ▶︎ Represent directors in resolving claims and disputes

Recovery actions commenced by liquidator (legal) ▶︎ Represent directors and owners in resolving claims

Sewell & Kettle Lawyers

Lawyers, restructuring accountants, and restructuring practitioners dedicated to helping businesses in distress.

If you have a client who requires a viability review or an initial consultation, please email our firm at: contact@sklawyers.com.au

Phone: 1300 996 001

Offices: Sydney, Melbourne & Gold Coast