Cashflow refers to the movement of money into and out of business, and it is one of the essential financial indicators for the business. This is why a proper financial record keeping is so important.
In Australia, the Australian Securities & Investments Commission (ASIC) is the government body in charge of regulating liquidators and other aspects of the insolvency process. Here we examine ASIC’s role in detail and compare it with the approach taken across the Tasman.
It is fair to say that, generally speaking, voluntary administration is not a successful mechanism for restructuring insolvent companies in Australia. Less than one percent end up in a successful compromise with creditors, a Deed of Company Arrangement (‘DOCA’), and continue trading.
Debt and asset restructuring for financially distressed companies has taken on a new significance in Australia with the introduction of a new process last year — small business debt restructuring.
The winding up or liquidation of a company means realising the assets of the business and distributing the proceeds to unsecured creditors. The problem: some portion of the business’ total value is always lost in an insolvent liquidation.
Businesses can struggle or fail in different ways. Consider an unprofitable transport business that hasn’t been able to put up rates in 20 years due to stiff competition. Or, consider the same type of business, where its unprofitability is caused by the inability to pay debts entered into by prior directors.
Seinfeld is famously referred to as a sitcom about ‘nothing’. Sometimes liquidations and voluntary administrations in Australia lose the plot and directors would be well served to conduct thorough due diligence before appointment and understand the dynamics at play.
If you serve an international customer market, the question naturally arises; where is the best place to base your crypto or fintech business? Our focus here is on exploring offshore solutions for Australian fintech and crypto startups — looking specifically at the possibility of setting up in the Cayman Islands (Cayman) as a jurisdiction of incorporation.
The Complete Guide to working out whether your troubled business should go into Voluntary Administration, Small Business Restructuring or just be liquidated?
When a business is in serious financial trouble, what is the best path ahead? This is, of course, a question for the directors of struggling businesses themselves, but it’s also a question for their lawyers, accountants and creditors.
Pre-insolvency advice is an area that is relatively under-regulated in Australia. While there is a range of Codes of Ethics and professional standards that may apply, they will only apply where an individual is a member of that specific profession or association (e.g. ARITA, CPA Australia or ABRTC).
As with any profession, it is crucial that there is some level of oversight of the actions of insolvency practitioners. This is the only way to ensure that they are living up to their professional and legal standards.
A key purpose, arguably the prime purpose of a liquidation, is to give creditors the best possible return on their debt. After all, in the case of an insolvent liquidation, it is almost always the demands of creditors (such as through a statutory demand, see below) which precipitate a winding up or liquidation process.