Should your business fall into difficulty it’s important to plan the right moves and seek help fast. At Baker Tilly our insolvency experts focus not just on Insolvency but also Business Recovery.

What is business recovery?

Business recovery is when a company is seriously struggling to meet its financial obligations, and at risk of going insolvent and/or bankrupt. At this stage there is still potential for the business to recover but it often needs external help.

Our business recovery team can work alongside you and assist you in creating plans, negotiating with creditors, restructuring debt requirements, or seeking alternative finance, all with the aim of returning your business to profitability. The work is carried out by licensed insolvency practitioners who will directly assess the situation and guide you towards the best options moving forward. Making a connection with us at the right time may be the difference between losing years of hard work, to turning your business around and thriving with a renewed focus.

What is business insolvency?

Insolvency refers to the point in time when a business can no longer meet its debt obligations and cannot pay its lenders or creditors. It is usually the result of unexpected or unplanned-for market conditions, or mismanagement of company funds and finances, which often leads to a period of poor cash flow.

Formal insolvency proceedings can be initiated by creditors, shareholders or the courts.  When determining whether a business is insolvent, a court will generally apply a cash flow test, which essentially calculates the ratio of current assets compared to current liabilities. This will assist the court in determining whether the business has the capability to pay its debts.  

If a court serves a liquidation notice on a company, the company then has 10 working days in which its board or shareholders can appoint a liquidator. Thereafter, the court will make that decision unless the creditor approves the company’s preferred liquidator. 

What happens when a business becomes insolvent?

There are two main procedures that occur when a company becomes insolvent. Each differs slightly and results in different outcomes.

Liquidation

Liquidation refers to the process in which all the company’s assets are handed over to an accounting firm's liquidator, and the company is closed or deregistered. The liquidator then seeks to sell off those assets, with the priority being to pay back lenders and creditors. Our Licensed Insolvency Practitioners specialise in getting the best possible liquidation outcomes, should you need our help. 

Voluntary administration

This is when a company that provides accounting services and business advice (such as Baker Tilly Staples Rodway), acts as a voluntary administrator. Here we will work with your business and guide the operations of your company. This gives you time to come up with a way of saving your company, through coming up with new financial input or finding a way to restructure debt and financial obligations.

For more help, contact one of our business recovery experts (scroll down for their details). We provide services to companies across New Zealand.