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. Whatever the business valuation prior to a liquidator being appointed, the final value of assets will almost certainly be lower.
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.
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.
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.
While insolvency in Australia is a heavily regulated industry, historically, there is one segment of the industry that has had little oversight: pre-insolvency advisers. Arguably, this has been a detriment to the broader industry as the highly trained professionals in…
Are you owed money by a company that is being wound up? Don’t get your hopes up until you have seen the 3 month statutory liquidator’s report. It is this report that will give a clear indication of the likelihood of a return.
The winding-up of a company is a daunting experience for a director. They know that their previous actions are under close scrutiny. But does that scrutiny include their personal assets? In short, yes. But liquidators need to tread carefully. In this article, we look into liquidators using the examination power to inquire into a director’s personal assets.
A business turnaround is about getting a business moving in the right direction. Survival is the hopeful outcome of any turnaround process. Survival is a change in the challenged business for the better. It is the process by which a business in financial crisis is transformed into a viable entity.
Corporate insolvency practitioners are important gatekeepers in the economy. In Australia, there is a paradox that the system is designed to try to stop the insolvency practitioner from giving meaningful pre-insolvency advice to insolvent businesses. This is a pity because insolvency practitioners are well-placed to give pre-insolvency advice.
An important task for a liquidator, once appointed, is to see whether there are any transactions of the company that are ‘voidable’, and can be clawed back for the purposes of distribution to creditors.
If a liquidator is appointed to an insolvent company, and believes assets have been depleted due to fraud, what can they do? Even if the crime of fraud can be proven, this does not necessarily aid the liquidator in recovering assets. Here we look at the option for liquidators to use the concepts of ‘knowing receipt’ and ‘knowing assistance’ established in the 19th century English case of Barnes v Addy to recover from third parties in cases of fraud. It is a difficult claim to defend because it is vague and open to broad interpretation when a director fails to keep adequate books and records before winding up.