Recovery, Restructuring & Insolvency
Need help with Restructuring & Insolvency?
In times of financial uncertainty or distress, stakeholders including lenders, businesses, creditors and advisors often need expert assistance and advice. Chan & Naylor Restructuring, Turnaround and Insolvency offers a boutique alternative as a provider of restructuring and turnaround services throughout Australia.
Qualified insolvency practitioners, restructuring professionals and industry experts, manage all our engagements. Our emphasis is on providing quality and timely analysis, advice and solutions to businesses and individuals facing financial difficulties.
Chan & Naylor Restructuring, Turnaround and Insolvency believes the ideal solution for clients is a turnaround and restructuring solution, but remains aware that, in certain circumstances, the best outcome is to implement formal insolvency proceedings to minimise any adverse financial impact on stakeholders.
Our insolvency services include:
a. Voluntary Administrations and Deeds of Company Arrangement
b. Receiverships and Agents for the Mortgagee in Possession
c. Members Voluntary Liquidations
d. Debt & Business Viability Advisory
a. Investigative Accountants Reports
b. Solvency Reports
c. Safe Harbour Advisory
d. Asset Protection
a. Creditors Voluntary Liquidations
b. Official Liqquidations
c. Debt and Personal Insolvency
Insolvency is when a company or person can’t pay debts when they are due. There are several options available to an insolvent company or person:
- The most common corporate insolvency procedures for an insolvent company are liquidation, voluntary administration and receivership
- The available personal insolvency procedures for an insolvent person are bankruptcy and personal insolvency agreements.
1. When a business goes into administration
When a company is experiencing financial problems, it may be placed into administration, either voluntarily, by its directors, or involuntarily, by creditors that are owed money for goods or services provided to the company.
2. Voluntary administration and the role of an administrator
The aim of voluntary administration is to resolve a company’s future direction quickly. An independent and suitably qualified person called an administrator takes full control of the company to try to work out a way to save either the company or its business.
The administrator investigates and reports to creditors on the company’s business, property, affairs and financial circumstances, and on the three options available to creditors:
- End the voluntary administration and return the company to the directors’ control
- Approve a deed of company arrangement (DOCA) through which the company will pay all or part of its debts and then be free of those debts, or
- Wind up the company and appoint a liquidator.
3. Directors and voluntary administration
Directors cannot use their powers while the company is in voluntary administration. They must help the voluntary administrator by providing the company’s books and records, including a Report on Company Activities and Property and providing any further information about these that the voluntary administrator reasonably requires.
If the company goes from voluntary administration into a DOCA, the directors’ powers depend on the DOCA’s terms. When the DOCA is completed, the directors regain full control of the company, unless the DOCA provides for the company to go into liquidation on completion.
If the company goes from voluntary administration or a DOCA into liquidation, the directors cannot use their powers. If creditors resolve that the voluntary administration should end, control of the company goes back to the directors. Although the directors may appoint the administrator, the administrator must act fairly and impartially.
1. When a company goes into receivership
When a company experiences financial difficulty, a secured creditor (such as a bank, second tier lender) or the court may put the company into receivership.
2. The role of a receiver
An independent and suitably qualified person called a receiver is appointed by a secured creditor, or in special circumstances by a court, to take control of some or all of the company’s assets.
Creditors might be secured or unsecured:
- A secured creditor has a ‘security interest’, such as a mortgage, over some or all of the company’s assets
- An unsecured creditor does not have a security interest over the company’s assets
The receiver’s role is to:
- Collect and sell enough of the company’s assets to repay the debt owed to a secured creditor (this may include selling assets or the company’s business)
- Pay out the money collected in the order of priority required by law, and
- Report to Australian Securities & Investments Commission (ASIC) any possible offences or other irregular matters they come across.
The receiver has no obligation to report to unsecured creditors about the receivership. However, the receiver will usually write to all of the company’s suppliers to inform them of their appointment. Unsecured creditors are not entitled to see the receiver’s reports sent to the secured creditor.
If a receiver has the power to manage the company’s affairs, under the terms of appointment, they are known as a receiver and manager. It is possible for a company in receivership to also have an administrator or a liquidator appointed.
1. When a company goes into liquidation
When a company experiences financial difficulty, creditors or a court may put the company into liquidation.
2. The role of a liquidator
Liquidation of an insolvent company enables an independent and suitably qualified person called a liquidator to take control of the company so that its affairs can be wound up in an orderly and fair way for the benefit of all creditors. When a company is being liquidated because it is insolvent, the role of liquidators is to act for all creditors (secured and unsecured).
The liquidator’s role is to:
- Collect, protect and convert the company’s assets into cash
- Investigate and report to creditors about the company’s affairs
- Inquire into the failure of the company and possible offences by people involved with the company and report to ASIC
- After payment of the costs of the liquidation, and subject to the rights of any secured creditor, distribute the proceeds of the sale of company assets – first to priority creditors, including employees, and then to unsecured creditors, and
- Apply for deregistration of the company on completion of the liquidation.