Insolvency and Restructuring 

Clifton Hall provides expert restructuring and insolvency services in the following areas:

Voluntary Administration & Deeds of Company Arrangement

Voluntary Administration provides a framework for entities facing financial distress to restructure or recapitalise their business.  In a Voluntary Administration, the business is provided with breathing space to consider its position and, if applicable, formulate a restructuring plan which is proposed to creditors.   The primary objective of the voluntary administration process is to maximise the chances of a business continuing to trade or, if that is not possible, to facilitate a better return to creditors than would result from an immediate winding up of the business.

The outcome of a successful Voluntary Administration is typically a Deed of Company Arrangement (‘DOCA’), which is a binding agreement with creditors. A DOCA will usually involve creditors agreeing to compromise their debts and/or accept payments over time.

Voluntary Administration provides an opportunity for stakeholders to restructure the affairs of a business by avoiding liquidation and maximising the benefits for both members and creditors.

Clifton Hall’s team of registered liquidators are highly experienced in conducting voluntary administrations and have the technical skills and commercial acumen to achieve the best possible outcome for all creditors and stakeholders.

Small Business Restructuring

Small Business Restructuring is a process which allows a small business in financial distress to restructure its debts while its directors retain control of the business.  The process involves appointing a small business restructuring practitioner to support and guide the directors and to communicate with creditors regarding the proposed restructuring.

The initial phase of the restructure typically lasts 20 business days, during which the restructuring practitioner will assist the directors in formulating a plan which is proposed to creditors.   Creditors have 15 business days to vote on the plan which, if accepted, is binding on all unsecured creditors of the company.

Small business restructuring is designed to provide a quicker and lower cost restructuring option than voluntary administration, with the restructuring practitioner having limited involvement in the operation of the business during the restructuring process.

The appointed small business restructuring practitioner must be a registered liquidator.  Clifton Hall’s team of registered liquidators are experienced in conducting small business restructures, many of which have resulted in businesses continuing to trade, employees retaining their jobs and creditors receiving more than they would likely receive from the immediate winding up of the company.

Creditors’ Voluntary Liquidation

Creditors’ voluntary liquidation is an orderly process for winding up an insolvent entity’s affairs.  The shareholders of an entity can resolve to appoint a registered liquidator who assumes control of an entity and deals with its business, assets and debts.  Alternatively, a liquidator may be appointed by creditors who vote to wind up an entity following a voluntary administration.

The role of the liquidator is to:

  • take control of and realise all of the entity’s assets
  • communicate with the entity’s creditors and employees
  • provide reports to creditors
  • investigate the affairs of the entity and report to the Australian Securities and Investments Commission or Consumer and Business Services
  • pursue any legal claims which might recover funds
  • distribute any available funds to creditors in accordance with statutory priorities

Clifton Hall’s team of registered liquidators are highly experienced in conducting creditors’ voluntary liquidations and have the technical skills and commercial acumen to maximise the outcome for all creditors and stakeholders.

Court Liquidation

A court liquidation is a process initiated by a court ordering that an entity be wound up, typically upon the application of a creditor seeking payment of unpaid debts.  The appointment of a liquidator will relieve directors of their responsibility to deal with the entity’s affairs.  Immediately upon the court ordering the winding up, the liquidator will assume control of the entity and deal with its business, assets and debts.

The court appointed liquidator is required to:

  • take control of and realise all of the entity’s assets
  • communicate with the entity’s creditors and employees
  • provide reports to creditors
  • investigate the affairs of the entity and report to the Australian Securities and Investments Commission or Consumer and Business Services
  • pursue any legal claims which might recover funds
  • distribute any available funds to creditors in accordance with statutory priorities

If appointed, Clifton Hall’s team of registered liquidators will ensure that the entity’s assets are realised in the most effective manner and appropriate investigations are efficiently undertaken in order to maximise outcomes for all creditors and stakeholders.

Receivership

A receiver or receiver and manager is typically appointed by a secured creditor under the powers contained in a mortgage or secured loan agreement.  The role of the receiver is to act on behalf of the secured creditor and assume control of some or all of the borrower’s assets.  The receiver is responsible for protecting and realising those assets in a way which maximises the funds available to repay the debt owed to the secured creditor.  The optimal realisation strategy may include continuing to trade a business in order to achieve a going concern sale or ceasing the business and attempting an orderly sale of assets on an in-situ basis.

Clifton Hall has extensive experience working with secured lenders to determine and implement appropriate realisation strategies that maximise recoveries for all stakeholders.

A receiver or receiver and manager may also be appointed by the court where it considers it necessary to protect the interests of stakeholders associated with the business or in relation to trust assets where the trust’s insolvent corporate trustee has been removed.  A court appointed receiver and manager is an officer of the court and the nature and scope of the appointment is determined by the specific orders made by the court.

Clifton Hall’s team of registered liquidators have extensive experience in acting as court appointed receivers or receivers and managers.  These appointments typically arise due to partnership or owner disputes and require highly skilled and independent practitioners to take control of a business or assets, implement a realisation strategy and ensure the appropriate distribution of funds to creditors and stakeholders.

Members’ Voluntary (Solvent) Liquidation

When an entity is solvent but has outlived its usefulness, its members can resolve to wind up the entity’s affairs via a members’ voluntary liquidation (‘MVL’).  MVL is the formal process of winding up an entity in a manner which ensures all of its affairs are properly and expertly resolved.

The benefits of undertaking an MVL to finalise the affairs of an entity include:

  • minimising ongoing accounting and compliance costs
  • simplifying corporate group structures and closing dormant entities
  • tax effective distributions to shareholders via return of share capital, accessing small business Capital Gains Tax (‘CGT’) concessions or the distribution of pre-CGT reserves
  • ability to distribute an entity’s surplus assets in-specie to shareholders
  • access to certain stamp duty exemptions on in-specie distributions of land to shareholders
  • winding up an incorporated association in accordance with its rules in order to discharge the committee’s duties and obligations

Clifton Hall’s team of registered liquidators are highly experienced in undertaking MVLs for a variety of clients including small to medium sized companies, ASX listed entities, incorporated associations and co-operatives.

If appointed, we will ensure that the MVL process is proficiently carried out to alleviate the risk of potential liability for directors or committee members and achieve the most tax effective outcome for shareholders.

Independent Business Reviews

An independent business review involves an objective analysis of an entity’s operational and financial performance to support financiers, directors or other stakeholders make decisions regarding a business.

These reviews typically involve a quick and focused report to directors or financiers on an entity’s current financial condition and advice on strategies a company can employ to remedy financial difficulties or improve current performance.

Working closely with an entity’s management, Clifton Hall’s team of experts conduct detailed business reviews to provide independent advice stakeholders.  Independent business reviews can be tailored to suit specific requirements however typically include:

  • evaluating the historical and forecast financial position, trading performance and cash flows of an entity
  • analysing a lender’s security position and advice on managing and mitigating credit risk
  • assessing restructure options for a financially distressed business
  • identifying performance improvement opportunities
  • identifying areas of risk

Safe Harbour

In 2017, Safe Harbour legislation was passed allowing directors of financial distressed companies to access protection from personal liability for insolvent trading while implementing a turnaround strategy for their business.

The Safe Harbour legislation provides directors with breathing space to turnaround their business without fear of being pursued for an insolvent trading claim which may lead to them prematurely placing their company into external administration. With the assistance of an appropriately qualified advisor, Safe Harbour supports businesses wanting to work through financial difficulties by putting in place a restructuring plan that is likely to lead to a better outcome than a formal insolvency appointment.

Clifton Hall can assist by:

  • advising on the requirements for Safe Harbour protection
  • providing a financial viability assessment
  • assisting with the preparation of an integrated financial forecast
  • assisting with the development and implementation of an appropriate turnaround plan
  • ongoing monitoring and reporting to stakeholders

Should you require further information please contact Timothy, Simon, Daniel or Anna.

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