Melbourne Concrete Works Pty Ltd (MCPL) is a construction company. Its directors were Mr. Richard Stone, Mr. William Marsden, and Mr. Joseph Vince. MCPL then entered into a finance facility with Common Australian Bank (CAB) so that operations would not be affected. CAB appointed Mr. John Hope and Mr. Stuart Manning, from the firm Howells Solvency and Forensic Accountants, to conduct the review. When MCPL was likely to become insolvent, the directors decided to enter into voluntary administration. A voluntary Administrator is an independent person appointed by the directors to carry on the process of Voluntary Administration. Voluntary Administration is a procedure that places an insolvent company in the hands of an independent person who is entitled to use all the options available to ensure the most effective result for creditors and business owners. Voluntary administration is a procedure framed to facilitate a company with open space from its regular operations. When a company is going through financial hardships and is not in a position to pay its debts, the company directors resort to the administrator. The administrator organizes the assets and liabilities in the most effective manner.
Following are the categories of the company that engages voluntary administrators:
Other alternatives that can be opted in place of voluntary administration are liquidation and receivership. The purpose of a Voluntary Administration is to protect the company so it can carry on its operations, whereas the purpose of liquidation is to conclude all of its matters. On the other hand, receivership differs from Voluntary Administration, as the latter aims to safeguard companies from its creditors. Whereas, Receivership is resorted by those banks and creditors that believe the business cannot pay its debts. Unlike in administration, directors cannot place their own company into receivership.
While the review process was going on, Few suppliers of MCPL insisted on cash on delivery. Especially, Boston Cement Ltd (BCL), a supplier of cement and lime, that was a regular supplier of cement to MCPL between July 2008 and July 2018 under an agreement known as the “Bulk Supply Agreement” gave a demand notice to MCPL recovering their outstanding amount. BCL claimed that there was an unpaid balance of $11,660,582.86 due and payable by MCPL to BCL as of 30 July 2019. The Bulk Supply Agreement also contained a clause (Clause 9) that allows BCL to terminate the contract in the event that MCPL enters into voluntary administration, receivership, or liquidation. The effect of Clause 9of the Bulk Supply Agreement being used on is that in Australia, for contracts made after 1 July 2018, there are legal stay on the effectiveness of contractual rights in opposition to an organization that rise up only due to the fact :
The employer enters, or proposes to go into, an association or compromise to avoid an insolvent completing;
A receiver, receiver and supervisor, controller, mortgagee in possession or agent for the mortgagee in possession is appointed to the assets of the business enterprise; or
The company opted for the procedure of voluntary administration.
Certain rights such as rights to terminate, rights to overall performance or put into effect overall performance, rights of task or, novation and rights to the fee under an indemnity are exempted from the ambit of statutory stay. Other rights along with rights to terminate, performance suspension, and step-in will be effective simplest when the criminal live on enforcement is removed through the order of the court, or approval to the enforcement is provided by the counterparty.
It is still right to include express rights of .termination arising upon the insolvency of the other party, as these rights are not null but merely effective during the period of the legal stay. However, parties should attempt to include more concrete triggers of termination (for example, triggered due to non-performance or non-payment) in order to retain an immediately effective termination right.
A voluntary administrator can be appointed by:
The process of Voluntary administration begins with the appointment of the voluntary administrator.
After the appointment of the administrator, within the duration of eight business days, the voluntary administrator must conduct the first meeting of creditors unless the time extension has been granted by the court and a notice of not less than five business days of the meeting must be served to creditors.
Chang’s Pty Ltd entered liquidation and Ms. Philips was appointed as the liquidator. Ms. Philips finds that some of the company’s profits in the initial years are unaccounted for in the company’s books. She also finds that some documents were missing. Mr. Chang and his wife, however, refused to help Ms Phillips with her questions pertaining to these matters. Followings refer to the duties and responsibilities of Liquidator, Ms. Phillips-
Mr. Chu is worried about Chang’s Pty Ltd becoming insolvent. He believes strongly that Mr. Chang has used restaurant profits to buy himself a car and suspects that Mr. Chang will further divert the profits of the company. Mr. Chu wants to ensure that the money owed to him is paid as soon as possible. Being his advisor, I will advise him that the most reliable way of lending money to a friend (Here Mr. Chu was a good friend of Mr. Chang, is to make sure that he must have the intention and plan for the repayment of the amount at the time of lending it. Also, in such type of lending the lender can ask for the post-dated cheques for the repayment of the amount. Additionally, it can be also be suggested to enter into a registered lending agreement as a legal evidence of transaction with witnesses such as family members of both the parties. Also, the lender can directly ask the borrower to return the money due to financial urgency by explaining him the troubles that he can fave due to it.
Since, Chang Pty. Ltd was facing losses, Following are the advice that can be given for reviving a business which is at the verge of death.
A troubled commercial enterprise needs to get its financial assistance by slicing, minimising ,reducing and removing pointless costs. Go via the operating budget step by step and investigate for instant approaches to reduce expenses. You can be capable of reduce expenses, along with implementing an energy-saving steps that allow you to save on power costs, in addition to completely eliminating useless expenditure, consisting of weekly delivery of edibles. Take various passes via the budget, make as many reductions as feasible and remove redundant positions, if possible.
Minimizing the troubles the business is experiencing. For instance, if a competitor enters your market and gives an efficient product or lower amount, one of the principal problems of your enterprise’s failure is an incapability to compete. In this instance, placing your attention on matching expenses or selling great of the carrier overcharge. If your predominant hassle is a slowdown in business, evaluate the effectiveness of your sales pressure and the complexity and comprehensive nature of your advertising and marketing and advertising method. Identifying main areas of the slowdown of the business that allows the business to concentrate on the turnaround efforts.
If the business is facing a poor inflow of cash but the business owner has a confidence about the success and survival of the business model, consider resorting to a small business loan to assist the owner through a temporary phase. The cash can be utilized for launching a promotional strategy, increasing the offerings of product or service, hiring more human resources, or even relocating the business to provide better services in the market or minimize operating or overhead expenses.
Perform a SWOT analysis:
A SWOT analysis that helps to determine the strength, weakness, opportunity, and threat can be carried on in order to determine the arrest that need to be focused more and helps to evaluate the current performance. It also assists undesirable elements that may be external or internal, the problem with the product, pricing, market need, operational processes, and customer demands. It also suggests and discovers a specific areas where improvements can be made.
Understand Your Target Market And Ideal Client:
It is the most important step. Today the market is customer-centric. It is very important to understand the ideal client and therefore target such markets. The most are the understanding of the target market, the more will be the understanding of the areas where efforts are needed.
Making new innovations:
In cases of food and beverages, new and fresh products can help in reviving the company. Customers gets attracted to the new product and therefore finds a reason to visit the restaurant for satisfying their taste buds. This helps to create a vast customer base. Also, renovation relating to the interior design and services can be made which helps to bring attraction to the restaurant and its services.
Save on fixtures and furniture:
While it is very attracting and tempting to get customized pieces of furnitures and unique interiors for the hotels, the cost involved is also very high. The cost exceeds the ultimate benefits. It’s an area that must be analyzed carefully to cut unnecessary costs. The suppliers of interior equipments have vast deals and packages that can be used to cut unnecessary and heavy cost.
Legal vision,’What is voluntary administration.’ (Nov, 2019) <https://legalvision.com.au/corporate-insolvency-101-what-is-voluntary-administration/>.
Business Rescue expert ‘ Keys differences between administrator and receivorship.’ (2020) <https://www.businessrescueexpert.co.uk/difference-between-administration-and-receivership/>.
Australian securities and investment commission, ‘Voluntary administration: A guide for creditors.’ ( 2020) <https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors/#:~:text=Table%201%3A%20The%20voluntary%20administration%20process&text=A%20voluntary%20administrator%20can%20be,all%20of%20the%20company's%20property>.
Andre Palko, 10 ways to revive a failed product or product. '<https://www.smallbusinessrainmaker.com/small-business-marketing-blog/18-ways-to-revive-a-failed-product-or-service>
Baker Mckenzie, ‘Contract termination in Australia.’ (2020) <https://www.lexology.com/library/detail.aspx?g=12ee791e-df4a-4178-91c8-cfea5b862137>
Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Law Assignment Help
Proofreading and Editing$9.00Per Page
Consultation with Expert$35.00Per Hour
Live Session 1-on-1$40.00Per 30 min.
Doing your Assignment with our resources is simple, take Expert assistance to ensure HD Grades. Here you Go....
My Assignment Services acknowledges the academic integrity guidelines prescribed as per Australian Universities to ensure that the services, sample material, and study resources available on our website, in no way are utilised to commit academic misconduct of any type. All users of our services must adhere to and affirm acceptance of all conditions elucidated in our policy document on academic integrity.