Many previously successful businesses have had no choice -thanks to circumstances beyond their control – but to enter into voluntary administration in order to salvage their companies. Many Australian stores have struggled to stay afloat financially in recent years, due to the echoing effects of the high Australian dollar. Others suffer as a result of a highly competitive market or misfortunes in their operations.
The Australian Securities and Investments Commission’s first quarterly insolvency statistics for the 2014-15 financial year show a rise of 6.6 per cent in the number of voluntary administrations across the nation, as compared to the previous quarter.
Just last month, Australian fashion designer Josh Goot placed his popular label into voluntary administration, in an attempt to save his decade-old business through restructuring. Goot listed the reasons for the downfall of his business as the high Australian dollar and the overcrowded fashion retail market, which is currently dominated by international luxury fashion brands.
Last year, another famous Australian clothing designer, Kirrily Johnston, placed her business into administration. Like many other store owners, Johnston put the insolvency of her business down to the inability to bounce back from the high Australian dollar and GFC, high rent and general manufacturing bad luck. Moreover, she said her label suffered due to the increasing number of sales lost to online purchases.
A business facing a financial crisis caused by such factors may find itself unable to pay back its creditors. A company in this situation has several options, with liquidation at the more extreme end of the scale. A voluntary administration offers a less serious alternative to liquidation, by providing an opportunity under the Corporations Act to restructure and preserve the business. It can pay back its debts and avoid winding up, whilst also providing a better result for the creditors.
If you are looking to place your company in administration, CRS Insolvency Services can help. We are a team of fully licensed insolvency practitioners who have successfully helped many businesses to settle their debts and keep trading.
For more information on our services, or simply to get free advice, call us today on 1800 210 073.