Business Insolvency Management and Recovery

If your business is finding it increasingly difficult to pay its bills as and when they fall due or, if the value of its debts is getting close to the point where it will become more than the value of its assets, then it is at risk of becoming insolvent.

If your business does become insolvent, it essentially means that it cannot pay its creditors on time which leaves it vulnerable for these creditors to start proceedings against it for the recovery of their debts potentially leading to registered court judgements and bankruptcy.

However just because a business is struggling, it does not mean that it needs to fail. Indeed, most businesses that experience financial difficulties and seek early advice do not fail as with appropriate advice, businesses find a way around the problem.

Subject to the extremities of the position, no company or business should fail providing it takes the appropriate advice at the appropriate time. Visage Group’s primary efforts are directed towards ‘informal’ solutions that may be able to help clients manage debt / creditors and take back control of their finances before a voluntary / involuntary ‘formal’ insolvency procedure is implemented.  

The ATO, a landlord or indeed anybody that is owed money from a business that is struggling should be treated with the utmost respect.  In doing so, seeking early advice from Visage Business Recovery should enable the team to negotiate a way around the predicament to enable the business to continue trading whilst it implements a repayment programme.

Business Recovery is the term we use to work with management to assist in the preparation and implementation of a turnaround plan for the business rather than that business failing. Creditors demanding payment can be unpleasant to deal with and will employ all sorts of tactics to ratchet up pressure. Visage Business Recovery will help you deal with them

In principle, there are no liabilities associated with being a Director of an insolvent company. However, insolvency law and the Corporations Act dictates that as a Director of a Limited Company, your responsibilities to all stakeholders must be adhered to and if it is abused (i.e. by trading while insolvent) , then Directors ultimately should be accountable. So, it is important that any Director of an insolvent or struggling business takes advice and the earlier you do so, the better the prospects for recovery.

Likewise if you are trading as a partnership that is failing or worse, insolvent, it is imperative that any partner, member or associate, take immediate advice in order to reduce, as far as possible, any personal exposure to financial ruin.

With respect to personal guarantees if a business fails and you have personally guaranteed a debt (e.g. to a bank or finance company), then you are responsible for the debt.  However, the debt is normally subject to an asset, for example property, debtors, vehicles, stock etc. and your personal guarantee exposure will be subject to sale value of the asset. Visage Business Recovery would strongly suggest that anybody who has provided a personal guarantee, in circumstances where their business is struggling, seeks immediate advice given the ramifications of that guarantee being called upon. Personal guarantees can result in the personal bankruptcy of the provider.