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Ways Corporate Insolvency Practitioners Can Help

Ways Corporate Insolvency Practitioners Can Help

Businesses often experience financial concerns, which can quickly turn into significant distress if not addressed appropriately. Consulting a corporate insolvency practitioner is recommended to navigate through the existing economic situation of your company.

Insolvency is when the company cannot meet all its financial obligations to its lenders. Due to increased expenses, reduced cash inflow, and poor cash management, it can occur. If not handled immediately, it can lead a company toward bankruptcy.

Corporate insolvency practitioners can help you during the financial distress of your company. But firstly, it is essential to understand how an insolvency practitioner can assist you throughout the insolvency stage and add value to your company.

 

What Are Corporate Insolvency Practitioners?

A corporate insolvency practitioner is often engaged when a company struggles with its finances. A company’s board of directors’ primary responsibility is to create and implement a strategy for the company’s recovery or to arrange for the company’s winding up in a way that maximises returns to creditors and shareholders.

Corporate Insolvency Practitioners are responsible for:

  • Analysing the market climate to determine the company’s viability.
  • Choosing a strategy for the company’s rebirth from various available possibilities.
  • Negotiating the plan’s acceptance, then putting it into action, managing it, and keeping an eye on it.
  • Managing the company’s day-to-day activities at the same time.

An insolvency practitioner will have to do the following tasks while winding up a business:

  • Ensure that the company’s assets are collected, sold, and distributed to creditors following their respective priorities; and
  • If required, take legal action to collect the firm’s assets from third party companies on behalf of the firm while investigating the company’s affairs.

Due to disagreements of interest, insolvency practitioners have no obligation to directors. When a company goes into liquidation, an insolvency practitioner’s primary responsibility is to investigate the company’s past conduct and pursue the company’s directors to retrieve funds, for example, through unjustified choices and other unenforceable transactions or to report the company’s directors to Australian Securities and Investments Commission (ASIC).

According to guidelines that govern insolvency practitioners, insolvency practitioners are permitted to provide specific and detailed advice to the entity they are advising but are not allowed to provide specific/detailed advice to the directors regarding their personal obligations arising from the fallout of the liquidation. However, generic advice is permissible.

How Can Corporate Insolvency Practitioners Help?

Corporate insolvency practitioners evaluate the company’s financial situation and then establish an appropriate plan for the recovery or arrange to wind up the company to maximise the returns to the members and creditors of the company.

The corporate insolvency practitioner has numerous responsibilities, depending on the situation of the company, including:

  • Determining what exactly went wrong with the finances of the company and creating a thorough report to the creditors
  • Taking suitable measures to rescue companies and preserve jobs when possible
  • Handling complicated legal claims in which parties are involved whose actions resulted in the insolvency of the company
  • Becoming a negotiating intermediary between creditors and debtors to identify the appropriate repayment solutions to help companies avoid insolvency

It is crucial to involve a licensed corporate insolvency practitioner to oversee the following matters:

Members Voluntary Liquidation

Creditors Voluntary Liquidation

Administration

Compulsory Liquidation

Company Voluntary Arrangement

Individual Voluntary Arrangement

Bankruptcy

The corporate insolvency practitioner steps in and takes control from the management during the company insolvency and has to establish a report on the conduct of the directors. This helps the insolvency service in taking the right actions.

In case of reconstruction of the company, the corporate insolvency practitioner:

  • Evaluates the company’s viability within its market environment
  • Selects the right action from various possible options for the reconstruction
  • Negotiates approvals and later implement the plan while also managing and monitoring
  • Simultaneously handles the daily operations of the company

When Should You Consult Corporate Insolvency Practitioner

Many companies often consult a corporate insolvency practitioner when the financial distress levels become unmanageable for them, and the company directors realise they can’t continue in current circumstances. During this stage, the insolvency practitioner steps in to access the possible solutions and recommend the most feasible action.

However, to ensure that your company gets out of the financial situation and flourishes, you must consult the insolvency practitioner earlier. When you consult the experts in the initial stages of the problem, you ensure that your company has the best possible chances of survival.

You have a wide range of recovery options during the initial stages that can give you a higher chance to jump back on track. When left too long, the usual option left is winding down the company.

BAC’s Experience As Corporate Insolvency Practitioners

Bankruptcy Advisory Centre has over 70 years of combined relevant experience to guide your company through financial distress and lighten your burden. The team specialises in all aspects of business and personal debt and can identify the problem and devise the appropriate solutions.

Our director is registered as a Bankruptcy Trustee with AFSA and as a liquidator with ASIC and has more than 30 years of experience assisting companies through the insolvency and bankruptcy stages.

The BAC team has qualified professionals with the right expertise and knowledge to understand how challenging and emotionally draining such a situation is. This is why we are equipped with the right resources and solutions to assist you with the situation.

The professional corporate insolvency practitioner knows how to handle each case and find a cost-effective and straightforward solution. The experts thoroughly evaluate your situation and take over from you to find the best possible outcome for your company.

You can get a no-obligation, free consultation with our experts to discuss your insolvency problems.

 

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