Pre-Insolvency Advice

Why get pre-insolvency advice?

Before making the decision to appoint an administrator or liquidator to a company, directors should ensure they understand their options and make the right decision. Feeling overwhelmed by the situation and appointing an insolvency practitioner to take control of a company’s circumstances may feel like the only available option. However, such appointments have serious and irreversible consequences for a business and potentially its directors.

How can pre-insolvency advice help me?

Our approach is to look for the best outcomes realistically available in a company’s circumstances to minimise the financial impact on the company, your creditors and if appropriate, the directors personally. A broad range of solutions is available to deal with a company’s debts and these should be considered in every case. We provide advice and assistance to directors making these decisions for their business. Solutions may include:

  • Refinancing by directors or external parties
  • Entering into informal arrangements with creditors or proposing payment arrangements to the ATO and other creditors
  • Implementing a turnaround or restructuring strategy
  • Sale of business and/or assets for fair value on the open market or to a related entity
  • Voluntary administration and deed of company arrangement
  • Liquidation

 

Do I need to worry about pre-insolvency advice?

Directors need to make sure their actions and advice are legal. Directors of insolvent companies have a range of duties to act in the interests of the company’s creditors and to avoid trading while insolvent. Failing to understand these duties, or willfully ignoring them, carries risks which may result in legal claims and court proceedings, fines by ASIC and potentially jail time. Additionally, directors need to be cautious of any related party transactions which may be considered to be ‘phoenix’ activities. The ATO, ASIC and other Government bodies are closely following actions of companies and their directors to prevent and prosecute illegal phoenix activity.

 

How do I ensure the pre-insolvency advice I’m getting is legal?

The best way to ensure your advice is legal is to seek out qualified professionals to provide it. Insolvency lawyers, liquidators and members of ARITA (Australian Restructuring, Insolvency & Turnaround Association) are the best source of information. They’re experienced, understand the law and options, hold professional indemnity insurance and are regulated by their respective professional bodies.

Some accountants are also comfortable providing pre-insolvency advice.

 

Want to find out your options today?

You can be much more confident and better understand the impact of your decisions when you have the right advice. We assist clients to understand and implement any of the above solutions to deal with their company’s debts. We’re available to discuss your circumstances and options on 1300 4 CACTUS or on these contact details.