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