How do I start to deal with an insolvency, liquidation crisis?

The answer is to identify your best options and choose the right one. If it’s really serious we recommend you look at a planned liquidation business restructure out of insolvency that takes your key assets and business out of the company and the insolvency situation.

The important thing, which few people realise, is that there are good, legal, positive options available for wealth and business protection. Don’t just drift into insolvency. Don’t spend your personal wealth supporting your business without putting the best plan in place. Ironically, this option, a planned liquidation restructure out of insolvency, is often the best financial solution of all. Remember that your normal advisors (accountants and lawyers etc) tend to shy away once things get complex or when you can’t pay them. Second, the insolvency industry sees you as their fee ticket. The more assets you leave them, the longer they tend to focus on you and your company. So, yes, you there is a big downside but equally there is an opportunity to come out of this in a good position. We have proved it over and over again.

You may be feeling anything from mild concern to paralysing anxiousness right now. The important thing is that you have started thinking outside the square and reading advice by an organisation that has twenty five years experience in finding solutions for businesses facing insolvency.

Situations will of course vary, but there are steps we encourage everyone to take when facing financial difficulty or insolvency.

First

STEP AWAY from the company and insolvency issues for a moment and assess where you are personally across the three most important things in life – finances, health and family. Assess whether the company debt issues are impacting, or might impact, on your personal world, your personal finances, your health or your famiy. If so, then you must act. There is simply no reason not to call us or someone like us immediately. We have people at Triple R who have faced both company and personal financial insolvency crises and who have worked through it and come out stronger. They can help you do the same and save you from making expensive mistakes. If required they can help you do a planned liquidation business restructure to take you out of trouble and into a new future.

Second

BE ALERT RE THE ATO. One of the most serious threats to your personal position occurs if you receive a Directors Penalty Notice. Under new legislation, you have 21 days from the date of the notice to decide what to do. If you haven’t received a Directors Penalty Notice, but you think the ATO may be after your company for PAYG, GST or superannuation contributions, double check that your address with ASIC as a company director is correct (especially if you have moved recently), and that your registered office is your current accountant or lawyer and email them to ensure they will notify you by return email, phone or fax immediately if a demand is received. The ATO send Directors Penalty Notices to your residential address only. If they send it to your old address or the post doesn’t arrive, you are still made personally liable. The reason is that if you do not act within the 21 days you ARE PERSONALLY LIABLE for the notified amount. No arguments, no defenses. (Read our information sheets on What is the best way to negotiate with the ATO and I Have received a Directors Penalty Notice.) Triple R can make all these problems a thing of the past through a planned liquidation business restructure.

If you are personally insulated from the business liabilities and you have not received an ATO notice, congratulations. For people in this position the task is simply to maximise your personal position and, if possible, save the business with or without the company. There are many ways to win in this situation. Triple R can help you decide whether that involves persisting with the current entity or legally retaining assets and using the assets, know-how and connections you have built up in a new entity. (We will also do a simple double check for any personal exposure, just in case you have missed something.)

Regardless of where you are now, the next steps are the same. Ask us about your options.

Third

DON’T GIVE UP, your business has a fighting chance for survival long term. The number of people who just give up without trying emergency measures would surprise you. Most decide to blindly sign up to liquidate or enter voluntary administration because they are not aware of their choices or how the law can be legally used to your advantage.

Your focus right now should be twofold: 1) keeping a positive bank account balance and 2) making payroll (for further advice in this area read our information sheets on How Do I Buy Some Time and Relieving Cashflow Pressure). This will give you time to make the necessary decisions to restructure and make the necessary adjustments or to persist with your current entity and make the necessary business changes. To make that decision you need professional advice from an insolvency expert. Then you can make the right moves. If you contact us we can provide a 7-point plan which gives you the areas you must review and change. BUT – here’s a warning. When you get the expert insolvency advice, be careful who you go to. Many, in fact most, registered liquidators see you as a bag of assets that can generate fees for them. That’s how they make their money. They will certainly make more money out of you and your company if your crisis turns into a liquidation or voluntary administration with all your assets still ‘on board’. The more assets in the company, the greater their fees can be. They get their fees even if you end up unhappy with how they treat you and or the business. Even if you are made personally bankrupt or lose everything they still get their fees. In fact they are likely to get more fees if you are. Of course they will be nice to you and give you ‘friendly’ advice at the outset. But remember they are sworn to serve creditors’ interests even if it means destroying yours. Accountants and solicitors are usually helpful and on your side, but they are not experts in the area of insolvency law. We are completely independent of the liquidation and bankruptcy industry. Only Triple R has the skill, experience and mission to provide you with a complete planned liquidation business restructure so you don’t waste precious time and money.

Fourth

PROTECT YOUR ‘FAMILY’ – the most important people are the ones you love and who will support you through this. They will continue to do so but you have to explain to them what is happening and why. They may be shocked but if they start hearing things from third parties it undermines trust and provokes anger. People (and this includes employees, suppliers etc) can survive almost anything – if they have hope. The way to provide that is to show them that there is a way forward. The question they will ask is the same as the bank will ask… “but you were in charge before and look what happened, what is going to be different now”. Again, by showing them you understand why the crisis developed and that you are committed to a solution, you allow them to believe in you and have hope. The easiest way to do this is to choose an experienced new advisor or partner who can deliver a plan of action they see will work. Yes, we recommend you use Triple R because we believe we are the best but whoever you use, make sure they are experienced experts in crisis management and financial insolvency (but for the reasons above – perhaps not a liquidator). The best thing you can do for your family is have the best possible partner working with you, all the options available to you and if necessary, the capacity to do a planned liquidation business restructure.

Tell your family of any personal adjustments they will have to make and then ‘sell’ them on the plan. Tell them you now have expert advisors in place to help get you through this in the best possible shape. Be proud that you have made the decision to survive. They will sense your resolve and support you and grow stronger by watching you work through the crisis.

Fifth

DON’T LISTEN TO EVERYONE – you cannot afford to listen to people who are not experienced experts in this area. Otherwise you will receive conflicting advice and end up delaying and agonizing while your business wealth is lost. Resolve now that, whichever expert you use, you thrash things out and take their advice. Use your friends for moral support and personal advice – that’s what friends are for. In terms of choosing any other insolvency professionals I suggest you ask them how many planned liquidation business restructures they have done and ask to speak to the directors of those firms about their performance.

Start by reading our page on Critical Advice and then review all the topics in Your Questions Answered on our home page and choose which ones are most relevant to you. Make absolutely sure you read our information sheet on Mistakes and Pitfalls.

If you have any questions, of course, please contact us. We give free advice all the time, no problem.