In the 2015 financial year 12,726 businesses became insolvent.

There are many reasons why a business may face financial difficulties, some of the more common include economic downturn, poor financial advice in times gone, lack of proper long-term cash flow planning, loss or failure of an important customer, excessive borrowing to fuel business growth, risky/unreliable business strategy or investments to name a few.

As the year draws to a close and a new one is set to be launched, now is the time to start seriously assessing if you are experiencing any of the following indicators of financial distress:

  • Cash flow problems
  • ATO Income Tax and Integrated Client Account debts
  • ATO defaulted payment arrangements
  • Not lodged income tax returns
  • Not lodged Business Activity Statement returns
  • Outstanding creditors
  • Decline in earnings
  • Personal & Corporate Restructure

If you are, we will work with you quickly to identify the root of the problem and help you find a way to get back on your feet and protect your assets. Our first step is to see if we can fix things and get you and/or your business back on the right path forward. This is achieved through:

  • Taking a fresh look at the situation
  • Examining and reconstructing accounting records
  • Incorporating new entities to mitigate business risks
  • Finding out what the real problem is and assisting you to address it
  • Insolvency/Pre-liquidation action

In the event it is deemed your trading operations are nearing insolvency, it is at this time you must act to mitigate any risks or losses you may face should a ‘forced’ liquidations action be brought against you by either the ATO or other creditors.

The key to a well-managed restructure is to on the front foot and be proactive about cleaning up your financial affairs and to create an opportunity to make a fresh start.

The aim of this ‘Pre-Liquidation’ action is to as much as legally possible:

  • Protect personal assets of directors and immediate stakeholders, including the family home
  • Protect business assets where possible
  • Create a platform for the business to trade from debt in a new structure
  • Minimise losses as a result of the eventual liquidation

We have a strong network of legal advisors and registered liquidators to assist us in this process. Our role is to hold your hand throughout the entire process.

Call BlueSky Accounting on 03 9081 0400 – to discuss this issue further.