When a company is dealing with financial problems, tax debts are piling up and insolvency or liquidation is looming on the horizon, the way out of the mess can seem impossible, but it doesn’t have to be this way. At Tax Negotiators, we’re experts in all kinds of businesses and ways to navigate the complexities of pre-insolvency or voluntary administration financial stress. We are experienced advisors on pre-insolvency matters, liquidation and everything that goes with winding up or saving a company We also understand that your situation is unique and that all companies are different.
Struggling with pre-insolvency or corporate tax debt? Call Tax Negotiators.
When Should You Engage a Pre-insolvency Advisor?
You must seek the services of a pre-insolvency advisory expert or pre-liquidation advisor as soon as you become aware that your company may be in trouble or insolvent. A pre-insolvency advisor or insolvency practitioner’s task is to review the sale terms of a pre-pack. But what is a pre-pack liquidation? A pre-pack liquidation is a sale process through which the business is sold or assets of an insolvent company are agreed upon before a pre-solvency advisor is appointed. If the advisor thinks it appropriate, they can ratify the sale.
Warnings Signs of Insolvency
There are times when companies encounter financial difficulties; it’s just one of life’s harsh realities, especially in business operations. There are instances when these problems can be overcome, and at other times insolvency, liquidation and voluntary administration is the only option. The key to saving a company is recognising the warning signs and getting the right advice in a timely manner. But what are the warning signs?
The signs that a company is in danger of insolvency are sometimes hard to recognise, and denial is a thing when managers or business owners are busy trying to make a profit, which is why pre-insolvency advisors are crucial.
Some warning signs of pre-insolvency and insolvency
- Demands for payment – Your company is receiving threats of legal action for unpaid bills or a Statutory Demand from a secured or unsecured creditor.
- Maximum borrowing – You have unpaid company debt and the business has reached the limit of your bank overdraft and has been refused further credit.
- No money to pay staff wages – You may not have paid yourself for months hoping the next big sale will save you, but once workers’ wages can’t be paid, your business is virtually insolvent.
- No reliable management information – There is nothing in the company that can provide crucial information about its performance.
- Cash flow test – A cash flow test can help you determine where your business stands. If you can pay debts on time or in the ‘reasonably near future’ it can be a general test for cash flow.
- Balance sheet test – This tests the likelihood that the value of your business assets is less than your liabilities. To determine this with any accuracy you will need to appoint an independent valuer to assess the business assets correctly and consider all contingent liabilities.
Struggling with pre-insolvency or corporate tax debt? Call Tax Negotiators. Our experts can help you deal with the consequences of corporate tax debt and may help to ward off insolvency and bring about financial salvation for your business.
Experienced Pre-Pack and Pre-insolvency Advisors in Australia
Tax Negotiators’ experienced pre-insolvency practitioners and advisors are experts in the voluntary administration process and we’ve helped countless companies when the worst happened and they faced insolvency, liquidation or bankruptcy. If this is you, it’s crucial that you seek out the best guidance and support from the most experienced pre-pack and pre-insolvency advisors.
Illegal Phoenix Activity
The insolvency practitioner on your case at Tax Negotiators will be well-versed in corporate law and able to advise you on the complexities of a pre-pack sale and help avoid an illegal ‘phoenix activity’ (which can involve the transfer of a failed company’s business assets to a new entity to avoid paying outstanding debts). These debts can include money owed to creditors, the Australian Taxation Office (ATO) and employee entitlements and wages.
There have been news items in the media about attempts by government agencies to crack down on serial fraudulent phoenix activity, especially in the building and construction industry. And while phoenix activity is legal in the United Kingdom, in Australia on February 18, 2020, the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (Cth) was enacted to stem illegal phoenix activity.
Pre-Pack Sales
A pre-pack sale is where an insolvent company’s business and or assets are agreed upon before an insolvency practitioner is appointed. The practitioner then reviews the sale terms and if they are appropriate, the sale is ratified. In Australian law, insolvency practitioners cannot become administrators of pre-pack sales since there is a conflict of interest involved.
Contact Tax Negotiators Today
At Tax Negotiators we understand the complexities of insolvency and our team of insolvency practitioners and our pre-insolvency advisors are passionate about helping companies struggling with financial challenges. We provide expert pre-insolvency and pre-liquidation advice and work closely with our clients to guide them through the complex insolvency process or voluntary administration. Our pre liquidation advisors will explain the pre-pack insolvency process step by step as it applies to your special circumstances. We help all kinds of companies, so whether you’re in the building and construction industry or a corporate entity, Contact the team at Tax Negotiators today.