cannot pay its debts
If your SME business has fallen into financial difficulty, perhaps due to the current COVID-19 crisis, it’s important to obtain quality professional advice as soon as possible, so you’re in a position to make informed decisions while all options remain available.
When tough decisions are put off, financial damage can accrue and restructuring options begin to close off. A turnaround or restructure opportunity that is available in the early stages of financial decline may not be practicable or affordable after business debts have escalated, or a creditor has commenced a winding up proceeding against your company. Legal and other costs may become prohibitive.
Whether you choose to negotiate informally with creditors for deferred payment arrangements, enter into some form of external administration or defer action to a later date, depends on many factors. We are well placed to consider all these factors before recommending a course of action to you.
Commonly we see SME business owners put off seeking professional advice. We understand that it’s an emotional decision to seek insolvency advice as very often the SME business owner may not wish to hear the message that is forthcoming. But just as it’s unwise to delay medical treatment when you have a serious illness, exactly the same principle applies in the business world.
Failure to act when action is required can not only lead to business collapse, but can also have serious long term effects on both the personal financial position and mental well-being of company owners and directors.
However – be wary from whom you seek advice!
SME business owners should always ensure advice is sought only from qualified and regulated professionals (registered liquidators or lawyers who specialise in insolvency law). There are many unqualified and unscrupulous advisors in the market who are happy to take your money while leading you into arrangements that are both expensive and in many cases, illegal. These dodgy operators rely on their clients’ lack of knowledge of the law to extract their money on the promise of outcomes that are unrealistic or illegal. Despite what an untrustworthy advisor may tell you, very often, illegal or dubious arrangements will come back to bite you at a later date.
IRT Advisory has decades of experience working with SME business owners in financial difficulty. Our senior people started their careers in the 1980s and have seen many highs and lows over the years. Our principal, Andrew Poulter, is a registered liquidator and licensed to undertake small business restructuring. He is a full member of the Australian Restructuring, Insolvency and Turnaround Association (ARITA) and a Fellow of CPA Australia.
We understand and are sympathetic to the emotional impacts of business stress on owners and directors. An initial one-hour consultation with IRT Advisory is without cost or obligation.