Businesses in financial or management distress face a unique set of challenges. Achieving a turnaround or renewal of the business is challenging because multiple aspects of the entity must be addressed concurrently. Sufficient cash flow to ensure short-term survival is essential. However, simultaneously various internal and external stakeholders required management and communication and a process must be established to identify and improve the more viable parts of the entity to ensure a medium return to normal business operations.
The underlying causes of liquidity problems or trading losses can be complex and are not always readily apparent particularly to incumbent management. Companies that are able to recognise problems early have more time and flexibility to implement appropriate strategies. Internal denial or a lack of urgency often hinders the ability of businesses to effect necessary changes in a timely manner.
Significantly, the recent changes to Australian bankruptcy & insolvency laws implemented in 2017 incorporating the new “Safe Harbour” provisions seek to reduce the risk for a board engaged in a turnaround strategy. TBA has actively engaged with the Australian Federal Government and the Australian Restructuring, Insolvency and Turnaround Association to be well placed to advise on the opportunities that these changes create.
For further information on the new “Safe Harbour” provisions click here.