A liquidator’s recommendation to wind up a company is not necessarily the death sentence that most business owners think it is. This month marks the 12 month anniversary since Perks Integrated Business Services was instrumental in the implementation of a Deed of Company Arrangement to avoid liquidation for an Adelaide based company.

The creditors, who were owed in excess of $30m, decided to accept the Deed of Company Arrangement despite the administrator recommending the creditors liquidate the company.  The crucial components of the deal were open and transparent communication between all stakeholders, coupled with detailed planning, forecasting and binding financial commitments from the debtor companies.

“This is a monumental case and is quite a rare situation.  Once the administrators have recommended the creditors liquidate, you are not often able to overturn their recommendation” said Pat Hodby, Director of Perks Integrated Business Services.

A Deed of Company Arrangement is a binding arrangement between a company and its creditors which governs how the company’s affairs will be dealt with, which may be agreed to as a result of the company entering voluntary administration.

It aims to maximise the chances of the company, or as much as possible of its business, continuing, or to provide a better return for its creditors than an immediate winding up of the company, or both.

Perks, together with an Adelaide based law firm,  utilised a combination of strategic advice, negotiation, forecasting and financial modelling to not only prevent the company from being liquidated against all odds, but they also prevented the domino effect of multiple related businesses also realising financial ruin.

In this particular case, the commitment of the directors from the debtor entities to ensure the best possible outcome for the employees, creditors and related businesses ensured the Deed of Company Arrangement was accepted.  It was this personal commitment together with a financial contribution that tipped the decision making in favour of the Deed of Company Arrangement rather than liquidation.

“The critical success factor for any business trying to survive when it is under extreme duress is to seek specialist advice before it is too late” said Pat Hodby.

A specialist business adviser can assist you to face your business challenges by formulating strategies to position, negotiate and reinvigorate your business.  They will streamline your business to create value and help you create a successful, efficient and profitable enterprise.

For more information call Perks today on 8273 9300.