Where a formal process is necessary, BDO can help with formal corporate and personal insolvency services. We provide a cost-effective solution drawing on the appropriate industry expertise and local knowledge to maximise returns for stakeholders.
We provide the following services:
- Liquidations (solvent and insolvent)
- Voluntary administration
- Creditor compromises
Recent industry engagements include a range of sectors such as agri-businesses and farms, retail, wholesale, export, manufacturing, tourism, hospitality, construction and property.
A company is able to be placed into receivership by a secured lender in certain circumstances including a default and non-payment. The receiver’s primary function is to realise assets for the benefit of the secured creditor, although duties are owed to all creditors. In order for the receivership to be effective BDO quickly establishes the best strategy to maximise returns for the secured creditors and other stakeholders.
The purpose of a liquidation is to distribute the assets of the company to either its creditors or shareholders. A liquidator has certain powers under the Companies Act 1993 to investigate past transactions or breaches that may have disadvantaged creditors.
If a company recognises its inability to pay its debts, the shareholders may choose to appoint liquidators. Once appointed, BDO act swiftly to establish the best course of action and protect the interests of all those involved. While the approach is tailor-made to the unique circumstances of each company, the liquidators’ principle duty is always to realise the company’s assets and distribute the proceeds to the creditors.
Court appointed liquidation is the result of a petition, usually by a creditor, to the court to place the company in liquidation. Often the petitioning creditor has exhausted all other remedies to recover outstanding amounts. BDO insolvency partners are regularly appointed liquidators by the High Courts across New Zealand.
Solvent companies that have ceased to trade and wish to distribute tax-free capital to shareholders can be placed into solvent liquidation. Solvent liquidations can also be used for the purpose of restructuring shareholder entities or simply where the company is no longer required. BDO have expertise in managing the tax implications and restructuring affairs of shareholders.
Voluntary administration is an alternative option for companies facing financial difficulties. Voluntary administration can be a mechanism to maximise the opportunity of the company or its viable business, continuing. A moratorium immediately following appointment allows administrators time to assess the company’s position and provide recommendations to creditors.
A creditor compromise is essentially a deal with some or all of your creditors to agree to either a reduction in their debt or payment over time. Any proposal to creditors needs to be achievable and worthwhile for creditors.
Creditor compromises have the opportunity to provide all parties with a better outcome. Creditors can expect a better outcome than they would receive in a formal insolvency and the company continues to trade.
BDO has experience in drafting, proposing and managing creditor compromises.