Presented by Jones Partners
The Matter – Construction Industry
Incorporated in May 2006, the company provided polished concrete architecture for kitchens, bars, barbeques, stair treads and street and furniture monuments.
The company encountered financial difficulty, with accrued statutory debt of $271,000 and $41,000 owing to the company’s banking facility. The company’s financial difficulty was worsened by the collapse of a major construction debtor, who owed the company in excess of $170,000.
Our staff conducted a series of investigations and enquiries into the company, assessing its property, affairs, organisational structure, staffing, financial circumstances, and operational processes, ensuring its eligibility (pursuant to Section 453C of the Corporations Act) and its commercial viability for a proposal to be put forward to creditors. The company was deemed eligible, and we determined that a restructuring plan was viable.
It was determined a liquidation was unlikely to result in a return to creditors.
We then assisted the director in preparing a restructuring plan, which proposed an estimated return of 30 cents to the dollar for creditors. The estimated timing of a return to creditors is within four months of the proposal.
The majority of creditors approved the plan, including the statutory creditors.
The Matter- Hospitality Industry
Incorporated in November 2019, the company commenced the operation of a bistro located at a golf club in NSW. The company encountered financial difficulty after experiencing losses during the COVID 19 pandemic, which it was unable to recover from.
The extent of the entity’s debt was determined to be $287,000. The ATO was the majority creditor, making up 90% of the overall debt. The remaining creditors were trade creditors.
Our staff conducted a series of investigations and enquiries into the company, assessing its property, affairs, organisational structure, staffing, financial circumstances and operational processes, ensuring its eligibility (pursuant to Section 453C of the Corporations Act) and its commercial viability for a proposal to be put forward to creditors. The company was deemed eligible, and we determined that a restructuring plan was viable.
We then assisted the director in preparing a restructuring plan, which outlined an estimated return of 20 cents to the dollar for creditors. The estimated timing of a return to creditors was within four months of the proposal.
The creditors approved the restructuring plan.
The Elements of a Successful Proposal
Planning
A comprehensive, well-planned assessment of a company by a trusted and qualified professional is the key to formulating an effective proposal. A restructuring that has not been effectively planned and scrutinised is unlikely to be approved.
Company Records
It is fundamentally important that a company maintains good record-keeping practices, ensuring records are up to date and accurate. Accurate records reduce the likelihood of unintentional statutory breaches and will also allow for a more effective, timely and accurate quantification of the business’ financial health by the insolvency professional.
Communication
Timely communication is essential when liaising with affected stakeholders. Creditors must be informed of the situation, with concise, honest, and realistic information. Maintaining close communication with an emphasis on transparency will maximize the approval rate. Ensuring statutory creditors have all the necessary information in a timely manner can make or break a proposal.
Why Choose Us?
At this early stage, Jones Partners has a 100% success rate with SBR proposals. We pride ourselves on formulating concise, timely and effective proposals for our clients, that can ensure their survival within Australia’s vibrant small business community. For further information, please give us a call on +61 2 9251 5222.