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The 3 Advantages of Voluntary Liquidation

Liquidation refers to the act of winding up a company’s affairs whereby, in most cases, trading ceases. However, there are different types of liquidation: involuntary liquidation and voluntary liquidation.

 

Involuntary liquidation means that the company has been issued with a court order to be wound up, while voluntary liquidation is when a company director willingly applies for it to be wound up. While some people may prefer to wait until they are forced to close down their business, there are benefits to voluntary liquidation which can make it the preferred business solution for some.

 

  1. You can choose the liquidator

A major benefit of voluntary liquidation is that you can choose who will be appointed as the Liquidator of your company as opposed to an involuntary liquidation in which the court will appoint one on your behalf or the creditor apply to the court will nominate a liquidator of their choosing.

This means that you can take the time to do your research and choose a liquidator who you feel most comfortable being in charge of the liquidation of your company. This can make a big difference to your experience in this process.

 

  1. You are protected from personal liabilities

Choosing to voluntarily liquidate your company means that you recognise that your business is insolvent and that you have taken the appropriate steps in ensuring that the company’s best interests are met. Voluntary liquidation can help prevent you from being further responsible for debts which you may become personally liable to pay if you don’t cease to trade.

 

  1. You get a fresh start

We understand that it can be a tremendously difficult decision to voluntarily liquidate your company. However, voluntary liquidation can bring you a peace of mind. It can help you to see the end of a long and stressful time, and give you the space you need to begin the next chapter of your life.

 

CRS Insolvency Services are highly experienced in assisting insolvent companies to explore business debt options such as voluntary liquidation or voluntary administration . If you are concerned about your business’s solvency, then please speak to one of our friendly and professional debt consultants for 24/7 free expert advice on 1800 210 073.

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Benefits of Voluntary Administration

CRS Insolvency Services offers Voluntary Administration services for any company which is insolvent or is likely to become insolvent. Once the appointment is made, the administrator assumes control over the company and will become responsible for investigating the financial affairs and to recommend the next course of action to creditors, whether that be for the company:
• To enter into a Deed of Company Arrangement (DOCA); or
• To enter into Liquidation; or
• To hand back the control to the directors.

 
Benefits of Voluntary Administration: Takes away the risk of insolvent trading

If a company continues to trade while insolvent there are serious risks to the company’s directors and they may face criminal or civil penalties. If you appoint a voluntary administrator and then propose a DOCA which is accepted by creditors, the directors will avoid any claim for insolvent trading.

 
Benefits of Voluntary Administration: A moratorium is established over company debts

The appointment of a voluntary administrator will create a moratorium for a period of at least 30 days and possibly longer if the administration period is extended. This will provide valuable time to formulate a successful DOCA proposal without the stress of dealing with creditor demands.

 
Benefits of Voluntary Administration: A second chance

The appointment of a voluntary administrator will provide the directors and the company with a second chance. If the creditors accept your DOCA proposal then the control of the company will be returned to the directors and you will be given a second chance.

The appointment of a voluntary administrator is a serious step and you should not take this step without obtaining professional insolvency advice. At CRS we offer the first meeting free of charge.

If you are considering appointing an administrator you should contact us on 1800 210 073. Our insolvency hotline is open 24 hours 7 days a week.

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What Is Company Receivership?

Company receivership is when a receiver is appointed by a secured creditor to assume control over the company. Their purpose is to collect and sell the company’s assets in order to repay the debts owed to the secured creditor. The receiver will sell the assets for the benefit of the secured creditor at a price equivalent to its market value; if an asset does not have a market value, for the best price reasonably obtainable having regard to the circumstances existing when the asset is sold.

 

In a receivership, the appointed receiver’s duty is to this secured creditor, and as such, their position may include selling the ‘whole business’ as an ongoing concern.

 

The appointed receiver must report any possible offences that they observe in the business to the Australian Securities & Investments Commission (ASIC). They must also provide a detailed list of receipts and payments for the receivership to ASIC.

 

Can a company still trade even if it has entered into a receivership?

 

Receivership differs from liquidation in that the company can still continue to trade. In addition, the company director may still be in control of the business, though their powers may be limited depending on the situation and the amount of influence that the receivership has. This is what make receivership different from other forms of external administration.

CRS are experts in the field, and can help you to understand and work through any aspect of corporate insolvency, such as receivership. If you would like to find out more information about company receivership, then please contact us for free and confidential advice on 1800 210 073.

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What is a Director Penalty Notice?

Are you a company director who has recently received a Director Penalty Notice? Are you afraid of being held personally liable for your company’s debts? Then you need to learn more about the Director Penalty Notice and how it may affect you personally.

What is a Director Penalty Notice?

A Director Penalty Notice (DPN) is issued by the Australian Taxation Office (ATO). The ATO has the power to hold directors personally liable for any outstanding tax payments under certain circumstances.

What happens if you have received a Notice?

If you have received a notice, you must act immediately. You have 21days to act and put into affect one of the following four alternatives:

One. Pay the full debt.

Two. Enter into a formal repayment plan with ATO. If you chose this option, and the company later breaches the repayment plan, you will become personally liable for the full debt.

Three. Place the company into voluntary administration

Four. Place the company into liquidation.

If the company director fails to implement one of these options within the 21 day period, then the director will become personally liable for the amount stipulated in the Notice.

In order to know which course of action is most suitable for your company, you need to consult with an insolvency specialist. At CRS Insolvency Services, our consultants are all highly trained in corporate insolvency assignments. We will provide professional advice to help you make the best decision for your company while avoiding personal liabilities. Contact CRS Insolvency Services on 1800 210 073 for 24/7 free expert advice now.

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6 Warning Signs of Corporate Insolvency

As a business owner, it is important that you are able to recognise signs that your company may be insolvent, or on the way to becoming insolvent. Here are 6 warning signs of corporate insolvency that you must look out for.

  1. Cash on Delivery becomes a common phrase

If you are facing corporate insolvency, then your creditors and suppliers may begin to ask for Cash on Delivery (COD). This means that you must pay them when you receive the supplied goods and services, as opposed to being trusted to be able to pay them at a later date. Insolvency can affect your credit with suppliers and ability to maintain long-term relationships with them.

  1. Dishonour fees, bounced cheques

If the cheques that you are sending out are bouncing, then this is a clear sign of corporate insolvency, as it shows that there are insufficient funds in your account. This also rings true for dishonour fees.

  1. Books and records are not updated

One of the signs of corporate insolvency is out-dated books and records. As businesses run into financial distress, directors are less likely to maintain their books, as their focus will most likely be elsewhere. It is crucial that financial records are maintained, as failure to do so, under the Corporations Act, gives way to a statutory presumption of insolvency.

  1. Superannuation contributions are not paid

Business directors and owners who are experiencing financial distress often use their employees’ superannuation funds to help with short-term cash flow. This is because these payments are normally paid at the end of every quarter, so it is less noticeable if they are overdue.

It is important to note that under the Director’s Penalty Notice regime, if a director is unable to pay their employees’ superannuation fees, then they may be held personally liable for them.

  1. Business aesthetics are not maintained

One of the first aspects of a business to be affected by corporate insolvency is its aesthetics. If your business’ physical appearance has dropped or there are signs of poor maintenance and cleaning, then this could be an indication of poor financial health.

  1. Legal action

The tipping point for most companies at the risk of corporate insolvency is having legal action taken against them, such as receiving a Director’s Penalty Notice or winding-up application. These can bear serious consequences, such as being made personally liable for company debts.

If you are facing corporate insolvency, then you need to take action immediately. Please contact CRS Insolvency Services for free, 24/7 expert advice on 1800 210 073.

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Fitlink Experiences Financial Difficulty, Leaving Students in the Dark About Their Education

Fitlink describes themselves as “the Fitness Industry’s preferred qualification provider due to our reputation for producing high-quality and knowledgeable graduates.”

However, the students aspiring to be one of Fitlink’s qualified graduates were left in the dark about their financial collapse back in December 2015. They were not notified and instead were left to find out of the company’s fate for themselves.

Debbie Howell was a student of Fitlink. She had paid an advance of $2,200 to complete a Certificate IV in Fitness; a certificate mandatory for her to run her personal training business.

“I’ve forked out a lot of money to do this course, I paid for it up front because that was the cheapest way to do it.”

She realised something was wrong when her message to her tutor was left unanswered, a stark contrast to Fitlink’s usual immediate replies.

“I had a question and I contacted my tutor and I hadn’t had any response for a few days. I thought that was really weird because they always contacted me straight away.

“I rang the office number, it was the middle of the day, and the recording said these are our office hours and I thought, ‘well, I’m calling you during office hours’ and that’s when I started to get concerned.”

“Just by doing a Google search on the Internet, I saw in the search results Fitlink and liquidation, so I clicked on that and discovered they had gone into liquidation in December.”

Two of the companies behind Fitlink had experienced financial troubles. Fitlink Australia had been placed under administration whilst Traincorp Operations was placed into liquidation.

Tim Boman is the Brisbane accountant and property entrepreneur behind Fitlink, previously running it from a gym in Brisbane until it was closed with the building currently on sale.

Mr Boman also ran into financial distress when he was declared bankrupt in February. However, this is not the first case in which he has experienced financial issues.

In 2010, Australian Securities and Investments Commission (ASIC) fined Mr Boman $4,000 for not assisting a liquidator, and again in 2011.

Jennifer McKay, Professor of Business Law from the University of South Australia says, “He’s been declared bankrupt and also he has two current companies under investigation and they will take action in order to ensure that the prudential standard remains high.”

Despite this, he was named the new director and CEO of a company called Silver Academy, which now operates Fitlink.

Mr Bowman has strong connections to Silver Academy and its former and current directors. His wife, Angela Eluik was also a registered director of Silver Academy for a few months last year.

However, Mrs Eluik denied any involvement with Silver Academy stating, “No, I was never a director of Silver Academy.”

“I’m not involved with Silver Academy and students are being serviced and will continue to be serviced.”

After her experience, Howell filed a complaint to the vocational education regulator, the Australian Skills Quality Authority (ASQA). She is not the only one to complain.

ASQA Chief Commissioner, Chris Robinson, revealed “There’s been a number of complaints made by students about the training organisation since late last year and we’re currently looking at those.

“I’m not aware that Tim Boman is a director or a high managerial agent of that operation [Silver Academy] but that’s something we’ll investigate as well.”

ASIC would not comment on the matter, except to say that they were waiting for the final reports from the liquidator and administrators of Traincorp Operations and Fitlink Australia.

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How To Avoid Company Liquidation

When a company faces the prospect of liquidation, business owners can find the situation both financially and emotionally taxing. They are often stumped as to how to manage the situation without losing control of their finances and assets.

CRS Insolvency Services (CRS) has compiled an overview for companies to assist them in recovering from their debts to avoid liquidation.

One of the first steps that financially struggling companies should take is to examine their assets and identify any potential cash inflow opportunities.

If companies have items that could be sold at a high price, they should consider putting them on the market in order to generate funds, which could be used to repay any outstanding debts.

Similarly, your company may have some remaining stock that could be sold. You could even sell the physical property where your company is located or sub-let part of your premises. Selling such assets allows the business to continue operating while paying off debts with the funds obtained from selling existing possessions.

Another strategy is to review your company’s products and services to see if they are actually adding to the business’ bottom line. If they are not profitable, perhaps it is time to replace them with products and services that are likely to bring in more money or if they aren’t generating profit discontinue those products or services.

CRS can help if you are looking to avoid company liquidation by placing your company into Voluntary Administration. To learn more about the differences between company liquidation and Voluntary Administration 

If you wish to discuss your options further, please call us 24 hours a day / 7 days a week on 1800 210 073. CRS has a fully licensed and registered Liqiudator who can accept your appointment.

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Dick Smith Will Shut All Its Doors by April 30th

An iconic Australian brand, Dick Smith, is set to close the doors of its 363 stores across Australia and New Zealand.

With four core brands: Dick Smith, Electronics powered by Dick Smith, Move, and Move by Dick Smith, the brand had over 3300 employees and annual sales of $1.3 billion. After being placed into receivership on 4 January following voluntary administration, the sale of the physical operations of Dick Smith failed to produce a viable buyer.

However, the brand will perpetuate digitally as online retailer, Kogan.com, bought Dick Smith’s online retail business. Kogan.com is set to take over the online operations from 1 June 2016.

Founder and CEO of Kogan.com, Ruslan Kogan, stated, “Dick Smith is an iconic Australian brand and we’re thrilled to be able to keep it alive, as well as Aussie owned and run. I remember as a kid always visiting Dick Smith to look for parts to upgrade my computer. There is a strong history of passion in the Dick Smith community for how technology can improve our lives, and we look forward to helping making it more affordable and accessible for all.”

Currently, the Dick Smith receiver, Ferrier Hodgson, is said to be talking with ASIC regarding the rapid failure of the company.

The Dick Smith CEO, Nick Abboud, had previously stated, in only August last year, that the full year net profit for 2015-16 would be increased to between $45 million and $48 million.

According to reports, ASIC is also investigating.

In relation to current Dick Smith employees, some staff will be relocated to nearby stores while others will be made redundant. However, employee entitlements are expected to be paid in full as they are prioritised over secured credit claims.

Receiver James Stewart says, “We would like to thank the Dick Smith employees for their support during the controlled closure process,”.

“This is a difficult and uncertain time for them and we have really appreciated their commitment.”

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Fallen Mining Magnate Nathan Tinkler Facing Bankruptcy With Over $2.8 Million Debt

A Federal Court Judge has ruled on Tuesday morningthat GE Commercial is entitled to make fallen mining magnate Nathan Tinkler bankrupt.

Since 17 June of last year, Mr Tinkler has been fighting off a bankruptcy notice issued by GE Commercial, to whom the former billionaire owes more than $2.8 million on a Dassault Falcon jet. Mr Tinkler put the jet up for sale in 2013 after he ran into financial trouble.

Although in court Mr Tinkler’s lawyers argued that he was solvent and the bankruptcy notice issued by GE Commercial was defective, Federal Court Judge Justice Jacqueline Gleeson ruled in GE Commercial’s favour.

Justice Gleeson granted GE Commercial permission to force Mr Tinklerinto bankruptcy due to the lack of evidence to support Mr Tinkler’s legal team’s case.

Mr Tinkler’s lawyers have indicated they will seek an appeal.

Although bankruptcy is sometimes Court-ordered and forced upon individuals by their creditors, it is also commonly filed on a voluntary basis.

Bankruptcy is an appropriate debt solution for people who can no longer afford to repay their debts. Voluntary bankruptcy can offer individuals struggling with debt a fresh financial start in life. It is a suitable option for those with few or no assets to protect.

For free specialist and unbiased advice on whether bankruptcy is the right choice for you – or, to learn more about CRS Insolvency Services’ bankruptcy services, speak to one of our insolvency experts today. Call our friendly team on our toll free hotline at 1800 210 073.

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Voluntary Liquidation Explained in 5 Minutes

The dynamic and competitive environment in which businesses operate today often displays continuing threats of slowing growth opportunities, increased competition and uncertain economic positioning.
A company’s performance and sustainability within a market and/or industry now has the ability to change overnight with the consistent expansion of digital marketing and communications platforms.

At CRS Insolvency Services, we believe in the importance of continually assessing and evaluating your company’s financial situation to ensure that the possibility of operating while insolvent is avoided.

 

The question to be asked is:

Can my company pay its debts as and when they fall due?
If the answer to this question is no, CRS Insolvency Services advises that you take early intervention and consider voluntary liquidation.

 

What is voluntary liquidation?

Voluntary liquidation is an appropriate choice if there has been an insurmountable surge in company debt (i.e. it has become insolvent).
The voluntary liquidation process demands the fair distribution of company assets to owing creditors. Necessary investigations into company affairs are undertaken to declare that all debts and payable assets have been accounted for.

 

Why enter voluntary liquidation?
Unlike a court appointed liquidation, voluntary liquidation is initiated by the company members (i.e. directors and shareholders) and is not forced upon the company by court of law.
By appointing a third party to your company’s voluntary liquidation, creditors’, director/s’ and members’ interests can be protected while the voluntary liquidation process takes place. If in the case of a court appointed liquidation, creditors, directors and all other members receive little entitlement and/or say in the winding-up of affairs.

 

Who conducts the voluntary liquidation?

The voluntary liquidation process can be managed by a specialist liquidator, who is generally a specialised accountant experienced in company liquidations.
For more information about the process of voluntary liquidation, call CRS Insolvency Services today on 1800 210 073. We have a team of licensed liquidators ready to assist your case. Don’t let your company’s debts get the better of you. Contact CRS today for the right solutions tailored to suit your situation now. 

 

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