Company

Company Insolvency Options

When a company is collapsing, owners often struggle to know what to do next. These are common question:

• Should I ask my accountant what to do?
• Should I call a Liquidator?
• Should I call a Bankruptcy Specialist?
• Should I just go Bankrupt?
• Am I going to get in trouble?
• Am I going to end up in court?
• Do I have any options?
• What should I do next?

Firstly and most importantly, Try NOT to make rash decisions. Before you do anything it’s important that you understand ALL your options and speak to someone who can advise and educate you on your situation before you decide what to do. There are a lot of things to consider when deciding on your options, so be sure to complete a company evaluation first.

COMPANY INSOLVENCY OPTIONS
There are a number of Insolvency options available for companies and most of these options are not available to sole traders or Partnerships. These options include the following:

• • Voluntary Administration
  • Voluntary Administration to Restructure
  • Voluntary Administration to Liquidation.
  • Deed of Company Arrangement
• • Liquidation
  • Court Appointed
  • Creditors Voluntary
  • Member Voluntary
• Receivership

What is a voluntary administration?

Voluntary administration is where the directors of a financially troubled company appoint an external administrator called a ‘voluntary administrator’.
A secured creditor (someone the company owes money to) with a charge over most of the company’s assets can also appoint an Administrator.
The role of the voluntary administrator is to investigate the company’s affairs, to report to creditors and to recommend to creditors whether the company should enter into a Deed Of Company Arrangement (DOCA), be placed into Liquidation or be restructured and returned back to the directors.
A Voluntary Administrator is usually appointed by a company’s directors, after they decide that the company is insolvent or likely to become insolvent.

What is a Deed Of Company Arrangement (DOCA)?

When a Company goes into Voluntary Administration it may present a Deed of Company Arrangement (DOCA) to its creditors. This DOCA may then become a binding arrangement between the company and its creditors. The DOCA outlines and governs how the company’s affairs, including such things as it’s debts and its assets will be dealt with. The Arrangement aims to maximise the chances of the company continuing to trade, or to provide a better return for creditors than what they may get if the company is simply immediately wound up in Liquidation.

What is a liquidation or a winding up?

Liquidation is the orderly winding up of a company’s affairs. It involves selling the company’s assets, distributing the proceeds among creditors and then distributing any surplus to shareholders. The three types of liquidation are:

• Court Appointed.
• Creditors’ Voluntary.
• Members’ Voluntary.

A Court Appointed Liquidation results from a court order, usually initiated by a creditor of the company.
A Creditors’ voluntary liquidation is a Liquidation initiated by the company.

A Members’ Voluntary Liquidation is a Liquidation initiated by the shareholders of the company to close down a SOLVENT company. If your company is collapsing this does not apply to you.

What is a receivership?

A company most commonly goes into receivership when a receiver is appointed by a secured creditor who holds security or a charge over some or all of the company’s assets. The receiver’s primary role is to collect and sell enough of the company’s charged assets to repay the debt owed to the secured creditor.

Which option is best for me?

Good question. This is often a very difficult question to answer until you speak with someone who knows more about each of these options. It is best not to take any chances but to get advice on which one, if any, is best for you and your company.

To determine which is the best option for your circumstance, complete the Company questionnaire and we will provide you with a free analysis of your companies situation and guide you to the right choice. This is obligation free. If none of them is a good option and Personal Bankruptcy is your best choice we will be blunt and tell you.

Don’t leave this decision to luck. Making the wrong decision can have devastating consequences to you personally. Start with the company analysis. THIS IS A FREE SERVICE AND YOU WILL RECEIVE FREE ADVICE. We do not charge anything unless you appoint us to take action for you.

As Pre-Bankruptcy and Pre-Insolvency specialists, we will help you decide what is best FOR YOU!

Preparation is very important

The key is to prepare yourself and be educated before you begin any of these insolvency options. Whether a Liquidator or Administrator or Receiver is appointed by the courts or you appoint them voluntarily, there is a lot you need to know and do to prepare. Involve us. It is that simple. One of the most common questions we are asked is ‘Can I continue to run a business if I have been the Director of a Company that has been Liquidated?’ The answer is usually yes, but of course there are laws that need to be adhered to and a lot to consider. Placing your business into some form of management does not need to be the end of your business life. There are options, but in most cases people simply don’t know what they are. We simply explain your options and together we can help you to achieve the BEST POSSIBLE OUTCOME.

A good outcome…..

Here’s a Testimonial from one of our clients…

“Thank you for helping us. It’s been a tough few years. Thank God we found you. We were told to just let the business fall over because it was not worth keeping and declare bankrupt. That’s easy for someone else to say but we are in our 50’s and starting something new is not that easy for us and as you know this whole mess was the result of a bad business partner. When we started again with no debt, no partner and no stress it was amazing. The bank balance keeps going up and up instead of down down down. It’s been great. Thanks again.”

In all cases the best way for you to prepare is to talk to someone as soon as possible. We will advise you of what to be careful of. Just by talking to someone, you are not committing to anything, nor are you making a statement about your company’s finances, you are just getting advice.

While you are deciding, here are some points you have to be careful of are:

– Disposal of Assets. If you decide to sell your company’s assets, do so at a realistic value. Gone are the days of selling everything for $1. If you are unsure of the value of your assets, look at your balance sheet, which should give you a good idea.
– Showing Preference. If you are paying creditors something, then pay them all proportionate to their debt level. If you decide to pay one creditor over and above what you pay other creditors, you are breaking the rules and this money could be clawed back.
– Trading Insolvent. By far the biggest mistake Directors make in this situation is to carry on trading in the hope that a big contract will come through. Do not take on any more debt – period. No interest, no fines, nothing. If you do, you run the risk of being made personally liable for trading insolvent. If you are unsure of what you are doing, then get advice on how to prepare properly, it may just save you a whole heap of trouble and money.