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FAQ
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DEFINITIONS (see other page)

EXPERT OPINIONS (see other page)

TERMINOLOGY and ABBREVIATIONS LIST (on this page)

+ - COMMON INSOLVENCY TERMS EXPLAINED
+ - ADMINISTRATOR APPOINTED

ADMINISTRATOR – The purpose of liquidation or administration of an insolvent company is to have an independent and suitably qualified person (the liquidator) take control of the company so that its affairs can be wound up in an orderly and fair way for the benefit of all creditors. A company “in administration” does not always go into liquidation. How does administration affect shareholders and creditors? READ MORE

+ - AFSA - Australian Financial Security Authority

AFSA – Australian Financial Security Authority is the government organisation that guides you when you cannot pay your personal bills as a sole trader or partnership (not applicable for businesses that are Pty Ltd companies). In addition there are specialised accounting professionals who can be engaged to undertake personal insolvency agreements and bankruptcy for you. READ MORE 

+ - ARITA - Australian Restructuring Insolvency and Turnaround Association

ARITA – Australian Restructuring Insolvency and Turnaround Association provides business owners with explanations about the various processes of insolvency. READ MORE

+ - ASIC - Australian Securities and Investments Commission - register of insolvent businesses

ASIC is an independent Australian Government body set up to administer the Australian Securities and Investments Commission Act 2001 (ASIC Act).

They regularly publish a list of insolvency and company de-registration notices  READ MORE

+ - Business Name or ABN Register

Business Names search for information on organisations and business names recorded in ASIC registers. READ MORE

+ - Business rescue options

Business rescue processes are underpinned by corporate insolvency solutions are: voluntary administration, liquidation and receivership.  READ MORE

+ - Business Restructuring Options

Business Restructuring – Auxilium Partners provides business owners and investors/shareholders with expert advice to:

  • Address liquidity crisis
  • Improve working capital management and position the company for successful operational and financial restructure
  • Stabilize operations
  • Review/negotiate a restructuring/ turnaround package
  • Act as an Independent Financial Advisor in respect of multi-creditor workouts
  • Act as a Chief Restructuring Officer/Monitoring Agent to review and implement the turnaround/restructuring package
+ - CREDITORS AND THEIR RIGHTS

Creditors are owed money by a person or company (the debtor). You are a creditor of a company if the company owes you money. Creditors are usually lenders, suppliers of goods, retail customers and sometimes employees. What can you do as a creditor if you suspect a company is insolvent? READ MORE

+ - DEED OF COMPANY ARRANGEMENT (DOCA)

Deed Of Company Arrangement or DOCA may be agreed to as a result of the company entering voluntary administration. The document aims to maximise the chances of the company, or as much as possible of the company’s business continuing, or to provide a better return for creditors than an immediate winding up (liquidation) of the company.

A formal agreement (DOCA) is created between all participants in a company outlining the way forward and how to share out a defined financial amount to creditors. The DOCA is designed to give the business time and a formal structure to continue to trade on in a profitable way. READ MORE 

There is also a special type of DOCA associated with a Creditors’ Trust. READ MORE

+ - Directors, employees, creditors and shareholders - insolvency options

Directors, employees, creditors and shareholders – Insolvency INFORMATION SHEET 39 provides information for those affected by a company’s insolvency. READ MORE

+ - Insolvency - what it means

Insolvent companies are those that are unable to pay their debts when they fall due for payment. When a person is unable to pay their debts bankruptcy is one solution. Please consult AFSA for information about bankruptcy and personal insolvency agreements. Australian Securities and Investments Commission ASIC maintains records of insolvent companies.

Insolvency INFORMATION SHEET 41 lists a glossary of terms from ASIC to explain some of the terms you may come across in company insolvency proceedings. Note that many of the terms have a specific technical meaning in certain contexts. READ MORE

Insolvency terms are also explained in by ARITA. READ MORE 

+ - LIQUIDATION and LIQUIDATOR DUTIES

ASIC defines the purpose of liquidating an insolvent company is “to have an independent and suitably qualified person (the liquidator) take control of the company so that its affairs can be wound up in an orderly and fair way for the benefit of all creditors.” Sometimes a liquidator will be appointed as an administrator  in an effort not to liquidate the company. However if liquidation is the only option after review of finances the registered liquidator has precise duties described by Australian law: READ MORE

The aims of a liquidator are:

  • To collect, protect and realise the company’s assets
  • To investigate and report to creditors about the company’s affairs, including any unfair preferences that may be recoverable, any non-commercial transactions that may be set aside, and any possible claims against the company’s officers
  • To inquire into the failure of the company and possible offences by people involved with the company and report to ASIC
  • To distribute the proceeds of realisation – after payment of the costs of the liquidation, and subject to the rights of any secured creditor – first to priority creditors, including employees, and then to unsecured creditors
+ - Operational Performance Improvement

Operational efficiency and productivity reviews by Auxilium Partners improve operating margin and cash flows through analysis of:

Core and support process improvements

Supply chain (distribution and logistics) and procurement optimisation

Evaluation and improvement in outsourcing strategies

Optimisation of overheads and reduction in indirect procurement costs

  • Optimisation of working capital – cash, receivables and inventory
  • Improvement in productivity of fixed assets
+ - PPSR - Personal Property Securities Register

PPSR – Personal Property Securities Register is a national online register to help protect consumers when they are buying personal property such as cars, boats or artworks (not including land or buildings).

You can make a registration of personal property to record your secured interest in goods you are supplying. Therefore if your customer doesn’t pay,or goes broke, you are in a better position to get back some or all of the goods or their value.

PPSR can protect you when extending credit for goods supplied. READ MORE

+ - RECEIVERSHIP - options for creditors

Receivership – most commonly a company “goes into receivership” when a receiver is appointed by a secured creditor who holds a security interest in some or all of the company’s assets. The receiver’s primary role is to collect and sell enough of the company’s collateral (property) to repay the debt owed to the secured creditor. The court may also appoint a receiver over a company’s assets. READ MORE

+ - SECURED CREDITORS and PPSR

Secured creditors have registered their goods lised on Personal Property Securities Register PPSR an online registry that is administered by the government.  READ MORE  Secured creditors have security for their goods or loan. Security is an asset promised to guarantee the repayment of a debt. Security is intended to cover the debt amount if the debtor can’t pay it back. FOR EXAMPLE: personal property is an asset (not land) which includes, cars, boats, business inventory, copyright, patents, bank accounts and debts If you have registered your property on PPSR you are a secured creditor. The registration of “security interest” can protect against your customer’s insolvency and offers you a priority position as a secured creditor. READ MORE

Bob Jacobs from Auxilium Partners can be appointed as receiver by secured creditors seeking to recover their debt because he is a registered insolvency professional.  READ MORE

+ - UNSECURED CREDITORS

Unsecured creditors do not have security for a loan. If you are in business Personal Property = GOOD/ASSETS and Securities Register = DEBT READ MORE
Case studies about personal property READ MORE
DOWNLOAD the PDF here

+ - VOLUNTARY ADMINISTRATION - ALTERNATIVE TO LIQUIDATION

Voluntary administration (VA) includes CREDITORS VA and MEMBERS VA. These are processes directors decide upon that are designed to resolve the company’s future direction quickly, hopefully without liquidation. READ MORE

An independent qualified insolvency professional (the administrator) such as Bob Jacobs from Auxilium Partners is appointed to control the company to work out a way to save either the company or the company’s business. Based on his/her examination of the company’s affairs, the administrator may be able to restructure the company utilizing a Deed of Company Arrangement (DOCA).  If it isn’t possible to restructure the company or its business, the aim is to administer the affairs of the company in such a way that results in a better return to creditors than they would have received if the company had been placed straight into liquidation.

Putting a company into voluntary administration can be done by director/s calling a meeting of the board of the company, resolving that the company is insolvent, or likely to become insolvent, and resolving that a suitably qualified (should be a registered liquidator) voluntary administrator should be appointed. The directors need to obtain the written consent of a registered liquidator such as Bob Jacobs to act as voluntary administrator.

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