Tag: Small Business Restructure

The Initial Engagement

The engagement began through a referral from a bookkeeper who had a client facing significant stress and confusion. The client operated five businesses under one company structure. Two major businesses were lost due to flooding. During the relocation and rebuilding process, the client was defrauded by a builder. At the time of seeking help, the client faced approximately $800,000 in debt.

I cannot speak more highly or more warmly of Neil Mitchell from B & T Advisory.

I was referred to Neil during an extremely difficult time in my life, with my business having just suffered complete decimation from flooding and shortly after a significant theft from a builder.

I was distraught, lost and felt my situation was completely hopeless.  I was fortunate, however, to have an excellent bookkeeper who referred me to Neil and suggested that he may be able to find me a solution.

Business Structure Issues

The original setup with five businesses under one company created significant complications. Legal coordination was required to transfer leases and properly assign rental agreements. Bookkeeping records required considerable attention due to direct changes made to accounting files.

Our Collaborative Approach

The restructure involved coordination between:

• The client
• Referring bookkeeper
• Accountant
• Lawyer
• Restructuring specialist

All parties worked together to develop a clear plan and restructure the businesses into appropriate separate entities. This case required coordinated effort from multiple professional advisors working together. The trusted advisor relationship between the restructuring specialist and the referring bookkeeper was crucial to achieving a successful outcome and significant debt relief.

Within minutes of speaking to Neil I felt a sense of hope that I hadn’t felt in a long time.  Not only was Neil kind, empathetic and sensitive given my distressed state – he was also solution-focussed and clearly very experienced in restructuring matters, which was incredibly reassuring.

Shortly after our first phone call, Neil organised meetings with my accountant, bookkeeper and lawyer to ensure my business matters were up to date and everything was positioned correctly and appropriately for the ATO submission.

Small Business Restructure Outcome

The $800,000 debt was resolved through the Small Business Restructure process for approximately 30 cents on the dollar. The businesses were successfully separated and repositioned for sustainable operation.

Words cannot express to you the relief, happiness and gratitude I felt when Neil called me to give me the good news that our restructure had been approved.  It was the first time something had gone right in such a long time, made possible only through Neil’s expertise and guidance.

Business Restructure Success Factors

Trusted Referrer Relationship: Strong working relationship with the referring bookkeeper enabled open communication and unified advice to the client.

Clear Communication: Complex concepts were explained in simple terms, and understanding was confirmed before proceeding. Questions were encouraged and addressed patiently.

Collaborative Planning: Getting all professional advisors aligned and working toward the same objectives streamlined the process.

If you are facing a difficult period or hardships in your business and you have no idea what to do or who to turn to – Neil would be an excellent start.  A simple conversation turned into one of the best things I could have ever done for my business and I am eternally grateful to Neil for holding my hand through the process.

Business Insolvency Warning Signs for Advisors

• Clients injecting personal money into the company instead of extracting profits
• Rising Australian Taxation Office debt
• Unpaid superannuation obligations
• Creditors remaining unpaid beyond 60-90 days (depending on industry norms)
• Debtor amounts aging beyond 60-90 days
• Increasing overdue amounts across multiple categories

Talk to us today about how Small Business Restructure can help.

The Initial Engagement

Approximately a year ago, a director from a well-known group of takeaway shops, operating in Brisbane, was referred to us. They had recognised growing tax debts across their group of businesses and sought advice on possible solutions.

We sat with the director and their accountant to review the group’s structure, including eight companies.

After a detailed analysis, we determined that five of these were ideal candidates for a Small Business Restructuring (SBR), a still relatively new type of administration designed for businesses with debts under a million dollars, good lodgement history, and no outstanding superannuation.

The businesses were fundamentally sound, but carrying legacy tax debts they couldn’t shake off.

Challenges in Group Restructuring

Managing a group restructure presented advantages and challenges. On the positive side, dealing with a single director, accountant, and tax office representative was efficient.

However, the real complexity came from significant intercompany transactions, with funds and stock frequently moving between entities to keep the group afloat.

It made for a complex financial picture. We had to dig to see the real financial position clearly.

We spent considerable time reconciling these transactions, determining what debts should be forgiven, and preparing cash flow budgets to demonstrate the group’s sustainability post-restructure.

The Outcome

We proposed to creditors, predominantly the ATO, offering 20 cents in the dollar. It was a big win: all five plans were accepted, effectively reducing the group’s tax burden by 80%.

This result safeguarded dozens of jobs and allowed the businesses to continue operating in their communities. One of those stores is just around the corner from my place, and I take a little pride every time I drive past and know that without our help, that business might not be there today.

The Importance of Early Action

This case wasn’t about the business making massive mistakes – it was more about the COVID hangover a lot of hospitality businesses have been dealing with.

But generally, the biggest mistake we see is businesses not coming to us early enough. Sometimes, it’s head-in-the-sand, and sometimes, it’s a bit of misplaced pride. Often, people are excellent at what they do – good tradies, good restaurateurs – but they don’t really understand their finances.

There’s a dangerous myth out there that if you don’t lodge your tax returns, the tax office won’t know what you owe. It’s the exact opposite these days. Not lodging gets you into more trouble, not less.

Having a good accountant, a real partner in the business, can make a significant difference. Someone who spots the red flags early and encourages action before things spiral.

Why Small Business Restructure Is a Game Changer

The Small Business Restructure process has become an important part of our practice, accounting for about a third of our matters. It enables directors to remain in control of their businesses during the restructuring, offering a far more positive and constructive outcome compared to liquidation.

Collaboration is Key

While the initial referral came via a solicitor in this engagement, the ongoing collaboration with the client’s accountant was essential. Given the tight 20-business-day timeframe of an SBR, accountants play a critical role in ensuring timely and accurate information is provided which ultimately contributed to the success of the proposal.

The Data Breakdown

Number of Related Companies: 5

Industry: Hospitality

Total ATO Debt across all five businesses: $1,397,269

Other Debt: $369,729

Total Creditor Debt: $1,766,998

Savings on ATO Debt: $1,117,816

Savings on Other Debt: $295,783

Total Savings: $1,413,599

Amount paid in total: $353,399

Accepted c in the dollar value: 20c per SBR

Number of Jobs Saved: 42 (from the age range of 14-40 years old)

Talk to us today about how Small Business Restructure can help.