Consultants Pre-insolvency

Company directors and managers should carefully and regularly check the health and well-being of their businesses and make sure they don’t fall into any of the following categories which are surefire warning signs of financial difficulties and impending insolvency.

• Overdue Australian Taxation Office debts or Commonwealth and State taxes or the ATO has reported the unpaid company tax debt to registered credit reporting bureaus (CRBs).
• There are continual losses, and/or creditors are unpaid outside the terms of trade,
• Suppliers have placed the company on a cash-on-delivery (COD) status, or demand special payments before supplying the service or goods.
• The liquidity ratio is less than one, i.e. if sold, the company’s assets would not cover the debts.
• The company has a lacklustre relationship with the bank which makes it impossible to borrow more funds and it cannot access finance from alternative sources.
• The company is unable to raise more equity capital, it’s issuing post-dated cheques and dishonoured cheques or EFT payments and there is evidence of an unreasonable director-related transaction or transactions.
• Selected creditors have special arrangements made and/or there are rounded sum payments to creditors that can’t be reconciled to invoices.
• The company can’t make reliable forecasts because it cannot produce accurate, timely financial information to show trading performance and its financial position.
• The company is receiving letters from lawyers, or there are summonses, judgements, or warrants out against it.

The definition of insolvency is a state of financial distress in which a company is unable to pay its debts, whether they are tax debts owed to the ATO or general financial problems. Unresolved financial difficulties can lead to insolvency proceedings, in which legal action will be taken against the insolvent company, and assets may be liquidated to pay off outstanding debts. Determining if your company is insolvent or not is crucial, and the earliest this is done, the more chance you have of better the outcome.

If your company’s financial situation looks dire, you need the help and guidance of a registered liquidator or insolvency lawyer to manage things, assess your financial situation and offer advice on the best approach to deal with creditors and the like. It’s no good just thinking positive, hoping something will happen to turn your failing company around but doing nothing meaningful about the growing debt or financial distress.

Struggling to get your company out of tax debt or insolvency? Call Tax Negotiators today.

What is a Pre-Packaged Insolvency Process?

A pre-packaged (or ‘pre-pack) insolvency process is a chance to rescue a company without the cost and disturbance of the voluntary administration process, which is where a registered insolvency expert takes temporary control of an insolvent or pre-insolvent company. Pre-pack insolvency is a legal alternative to using voluntary administration to rescue an insolvent company from a liquidation fire sale. The company’s financial position, business assets and financial records are assessed to determine its future.

In the past in Australia, some insolvent companies used shonky and illegal private treaty deals, originally bottom of the harbour schemes, and now we have illegal phoenix activity where a new company of no value (or very little) continues operating a company that has been liquidated or abandoned to avoid paying outstanding debts, which can include ATO and state taxes, a company’s creditors and workers’ wages and entitlements.

At Tax Negotiators we understand the complexities of pre-insolvency and our team of pre-insolvency consultants is passionate about helping companies struggling with financial challenges. We provide expert pre-insolvency advice and support and our advisors work closely with our clients to guide them through the complex insolvency process, voluntary administration or liquidation. Contact us to make an appointment with Tax Negotiators pre-insolvency advisers today.