Use our advice to rescue your business and to preserve your assets and self-protect.
Mistakes and pitfalls
Common mistakes that directors make in financial company crisis are the ones anyone makes when they don’t know the rules. Why would a director want to learn complex Insolvency Law, voluntary administration and liquidation processes and know how to deal with receivers? But if financial problems or insolvency threatens, a director or owner need to avoid common mistakes and pitfalls because the consequences of getting it wrong are serious. You need to know your best options as well as the pitfalls to avoid.
Of all the mistakes we have seen in 20 years in company turnaround and insolvency, the most common and damaging is inaction. This can be caused by divisions among directors, ignorance of the options available and bad advice or simple fear and denial. Particularly dangerous is taking the issuing of a Director Penalty Notice (from the ATO) too lightly. We have seen families lose everything and go through awful times when they need not have. The other mistake is to fight on trying to pay debts when a restructure is the best option. It is also true that those owner directors who are natural fighters but who don’t know the options and rules of this area, can get themselves into trouble.
Common mistakes and pitfalls
Insolvency procedure and law is a minefield area. The trick is to know where the minefields are, how to navigate through them, what protective gear you need to wear etc. In some cases the mines are small, in others where the stakes ($value and misconduct) are high and scrutiny intense, they are big. Either way it is important to know someone who knows the rules. Remember, what happened has happened – you can’t change the past. Remember that life will go on to better things. All you have to do is to face the problem so you CAN move on to better things. Rebuild Now is here to help.
So there are two ways you can turn a challenging situation into a disaster.
- trust the wrong people, or
- make a big mistake.
Just because your accountant deals with finance doesn’t make him an expert in this area – accountants make their money from ‘compliance’ (tax, reports, etc) not from dealing with an insolvent company once every three years (the average failure rate in the average accountant’s client list). Similarly solicitors make their money from conveyancing, criminality, injury and contract law, not financial distress. Insolvent clients in financial distress don’t pay that well so why would they bother! Solicitors and accountants would be mad to spend the time required getting to know the procedures and law surrounding insolvency unless they were a registered liquidator or insolvency law specialist.
Up to now the liquidators and trustees have kept the knowledge to themselves. No more, because Rebuild Now works for people like you to balance things up and do the best for you; not only your creditors (which the liquidator /trustee is sworn to do even if it means your financial and emotional destruction). So don’t ask your accountant to do what he is not able to do. Ask Rebuild Now. We have been in this area for over 20 years, successfully dealing with multi-millions of dollars in assets.
The last thing you should do is rely on the Liquidator to advise you. Yes they will be all smiles until you appoint them, then it becomes, ‘well I’m just doing my job’ or ‘well, you didn’t tell me that so I have to act against you’. And you can’t do a thing about it once they are appointed.
Another pitfall is to listen to too many people. Sure you have lots of business friends who only want the best for you but have they got the experience and knowledge? At most they have gone through this once or know someone who has. Listening to multiple sources will send you round the twist. As we advise elsewhere – the only thing you have left to guide you is your intuition about people and your common sense. Use it. Pick the person you trust and who has the experience and knowledge to back it up and go with them.
Many people in this situation think they are alone. It feels exactly like that but now you can talk to us. You are not alone. There is a solution and an end to this predicament.
Another big mistake people like you can make, people who are proud and strong and defiant, is to put your own money and credit on the line for the business. Maybe pay the staff from your credit cards. Sure, it is your decision to do so, but you can do it safely, but do you how so that if the worst happens you won’t lose it. It is possible to do it safely and not risk your personal wealth any further. Just ask us how before you do it or how you can protect the money you have already committed.
Yet another mistake is to ignore the impact a possible insolvency could have on you personally. Many directors forget which arrangements they have personally guaranteed. Perhaps a directors penalty notice is imminent. Perhaps there are loans to directors on the books which will suddenly become ‘live’ if the company becomes insolvent. If this might be you, there are solutions. Ask us!
And sometimes there is the media – press, television etc. Sometimes you need to give them something but not too much. Your creditors will be watching. Let us help. That goes for the other ‘interested parties’ too – the ATO needs special handling, so too the financiers, angry creditors (if any).
Lesson: If your business is under pressure now, it could get worse or better. But the consequences of failure are likely to be tough on you. Act now to secure your future if things improve (by putting a financial ‘floor’ under you or by preserving what you can in the event that the company goes down.