What To Do When Your Business Is Failing
“My business is failing, what do I do?”
When your business is failing due to financial difficulties, it’s time to seek expert advice.
COVID19 created unexpected situations for Australian companies. Piling debts contribute to an increasingly stressful situations many are reluctant to face. Waiting too long to seek help from an insolvency specialist is a common mistake. We understand.
But our team is trained to help with business failings. A Perth-based firm with over seven decades of combined experience, our experts have guided companies across the country through tough times. At Bankruptcy Advisory Centre, we’ll answer your questions and provide informed advice.
Why is this happening?
Despite the difficulties brought on by the pandemic, initiatives such as JobKeeper supplements, insolvent trading moratorium, and loan payment deferrals contributed to 2020’s reduced bankruptcy and insolvency numbers across Australian business sectors.
With a number of safety net support services having come to an end, many businesses are facing a stark reality. If you’re worried your business may be placed into administration before 2021 ends, now is the time to take action, and come up with a plan.
What is a zombie business?
A zombie business or zombie company experiences high levels of business debt to the point where any income can only pay off the interest, or in some cases, not even that without some form of assistance. The term originated from Japan’s “Lost Decade”, the 1990s.
During that period, banks in Japan supported firms and helped them avoid bankruptcy. Conditions created to keep companies afloat during the pandemic have resulted in “zombie” businesses. Australia’s recent “zombie” spike has been noted.
Is the situation salvageable?
This is the big question, and you need an honest answer. Can steps be taken to restructure your company into a more cost-effective model? Would altered business practices increase the possibility of continued trading? Should debt reduction methods be a lead priority?
The smartest step at this juncture is to consult an expert for a realistic situational analysis. We excel at turn-around options, and offer business restructuring services. Speaking to a member of our Bankruptcy Advisory Team may mean avoiding administration.
Are there still government initiatives that help?
Businesses who were previous JobKeeper recipients from January 4-March 28 this year may be eligible for the Australian Government’s SME Recovery Loan Scheme. Only SMEs with a turnover of up to $250 million are eligible, as stated on The Treasury website.
Our job as financial specialists is to integrate and evaluate the available options with regards to your situation. Our expert team defines the reality your company is facing in current financial climes, and devises a path forward.
What is the difference between insolvency, and insolvent trading?
Insolvency means your business does not have the available resources to pay due debts. At the first sign of potential insolvency in the company’s future, seek expert advice, increasing the chance of a positive outcome.
Insolvent trading is a criminal offence, and occurs when you continue to do business despite being unable to pay present debts, and choose to incur more debt. Don’t let desperation lead you down this path. Speak to our team ASAP.
Should I enter voluntary administration?
When your business is failing, voluntary administration should be considered as it allows your board to appoint an administrator. At Bankruptcy Advisory Centre, we have vast experience with companies that choose to enter administration, often in the hope of saving the business.
An administrator can ascertain whether the company can survive, or should be sold or liquidated. They may decide the company can be salvaged by a comprehensive restructure of your business, making this a wise decision in retrospect.
What are insolvency law reforms?
The WA Small Business Development Corporation clarifies 2021 Australian insolvency laws reforms allow incorporated small businesses to work with a Specialist Small Business Restructuring Practitioner.
Thanks to the new model, where applicable the BAC team can instigate proven turn-around procedures, avoiding the more cumbersome standard Administration model. Best of all, the new model allows you to retain business control.
What does business liquidation mean?
Entering the liquidation process signals the end of the business for financial reasons. The focus is on dealing with the company’s debt, and involves a liquidator taking control to ensure the best result for your creditors.
You may be forced into this process by the courts, or it may be voluntary. If you still hold out hopes of your company moving forward, a consultation can ascertain whether liquidation is avoidable, recommended, or compulsory.
Can you help save my failing business?
We can try and are equipped to help. Business debt is a specialty area for our experienced team. Immersed in the stress of the situation, you may overlook key factors, or be missing necessary knowledge. If saving your business proves untenable, we’ll assist with the next stage.
Call us on 1300 887 210 or contact us online for a free consultation to discuss what to do when your business is failing. We’re registered Australian Financial Security Authority bankruptcy trustee and liquidators, and deal with businesses both in Perth and across Australia. Together, we’ll work on solutions.
As a Trustee in Bankruptcy, Ross Thomson is often required to think outside the box. As well as creative thinking, Ross brings compassion to the table.
For Ross, it’s important to see the people behind the financial problem –not just numbers.
Ross recently helped a bankrupt client who lives in a retirement village with her seriously ill husband.
The unit she & her husband live in is not owned by them, but subject to a 20-year lease.
The money to be repaid by the management was due only at sale, when the client finally left the retirement village.
Sale of the unit was likely to take several years &, if he did sell the couple’s unit, Ross realised he would be effectively evicting them from their home, without resources or family to help them.
Ross decided to contact the retirement village management & put a proposal to them that they prepay some of the moneys they would otherwise pay the client.
The village management considered the proposal & have agreed to prepay some of the moneys otherwise due.
The client is relieved that she will not be evicted & can now concentrate on helping her husband through his health issues.
The moneys paid represented about 75% of what would have been available to creditors if they waited two years.
It is a win for the client and for the creditors.
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Andrew put my mind at ease in one easy appointment. Very satisfied with the outcome and service provided. Highly recommend Andrew.
Andrew was a steadying hand with his advice.Showing that things aren't as bad as first thought nor any obstacle insurmountable. If you have questions needing answers, Andrew is the person to ask. Thanks for your advice Andrew.
Andrew was very knowledgeable, caring, helpful and compassionate when I went and saw him. He made me feel that I wasn’t the loser and failure that I thought I was being. Even down to the box of tissues on the table.. which I needed. Highly recommend to go see Andrew if your struggling. There is life after!
Andrew and his team do an excellent job of helping their clients with bankruptcy advice and it is a pleasure to work with him.
Don't hesitate contacting Andrew, I was stressed, struggled sleeping through debt. Andrew put me at ease. He listened to my situation and we decided on my next move. Andrew is professional and easy to talk too. I would recommend highly to anyone who wants help to give him a call. I appreciate your support Andrew. Regards Brett.
Andrew has given me back my life!!! After living paycheck to paycheck, I didn’t know what to do. Until I made the big step and booked an appointment with Andrew. As soon as I left his office I felt a huge weight lifted!!!
Andrew was prompt, organised, friendly and efficient with the processing of my documents and made everything very simple for me so I didn’t need to deal with the added pressure and stress. Thank you Andrew for allowing me to start afresh and getting it done within a matter of weeks.
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