August 6, 2025 • 18 mins
What is insolvency and how do you know when your business is in trouble? In this foundational episode, Darren Vardy shares his 30+ year journey in insolvency and breaks down the warning signs every business owner needs to recognise. Learn the difference between corporate and personal insolvency, and discover why acting early gives you the most options for recovery.
Key Topics Covered: • What insolvency actually means in practical terms • Early warning signs of business financial distress • The difference between corporate and personal insolvency • When to seek professional insolvency advice • Why businesses fail and how to recognise the patterns • The importance of acting before it's too late
Key Takeaways: ✓ Insolvency = inability to pay debts when they fall due ✓ Warning signs include tightening cashflow and delayed creditor payments ✓ Early intervention provides the most recovery options ✓ Professional advice should be sought at the first signs of trouble
Who Should Listen: Business owners, company directors, lawyers, accountants, and anyone wanting to understand financial distress warning signs.
About the Host:
Darren Vardy - Managing Director of Insolvency Options and Registered Liquidator with over 30 years of experience in business recovery and debt solutions. Darren has helped thousands of businesses and individuals navigate financial distress and find practical solutions to complex problems.
Connect With Us:
• Website: insolvencyoptions.com.au • Phone: 1800 463 328 • LinkedIn: https://www.linkedin.com/in/darrenvardy/
Subscribe & Follow:
Don't miss future episodes! Subscribe to i.O. - Insolvency Options
Like this episode? Please leave a review and share with colleagues who might benefit from these insights.
Co-host: Anthony Perl
Produced by: Podcasts Done For You
Hashtags:
#Insolvency #BusinessRecovery #DebtSolutions #SmallBusiness #BusinessAdvice #FinancialDistress #Liquidation #Bankruptcy #CashFlow #DirectorDuties #BusinessTurnaround #ProfessionalServices #LegalAdvice #AccountingProfessional #BusinessOwners #FinancialPlanning #CorporateInsolvency #PersonalBankruptcy #BusinessRestructuring #InsolvencyOptions
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:03):
Introduction to Insolvency,understanding the basics.
Welcome to our first episode of ioInsolvency Options with Darren Vadi,
the managing Director of InsolvencyOptions, and a registered liquidator.
With over 30 years of experiencehelping businesses and individuals
navigate financial challenges.
In today's episode, Darren shareshis journey into insolvency explains
(00:25):
what insolvency actually means.
And reveals the warning signs everybusiness owner needs to recognize.
We'll explore when to seekhelp and the difference between
corporate and personal insolvency.
You'll understand thefundamentals of insolvency.
Know when to seek professionaladvice and learn why acting
early gives you the most options.
I'm your co-host, Anthony Pearl.
(00:46):
Let's dive into unlockingmore about insolvency options.
Well, first of all, Darren,welcome to your podcast.
Thank you.
Thank you very much.
I think we need to kick things offreally by introducing yourself properly
to the audience, and why don't youtell everyone a little bit about
who you are and where it all began.
(01:09):
Yeah, sure.
So it all began a bit over 35 years ago,having come straight out of high school.
I.
Applied for many accounting roles withvarious firms throughout Sydney and
was fortunate enough to be acceptedto a one of the largest firms at
that time, which was Ferer Hodson.
(01:30):
And so from there I worked throughthe nineties in smaller firms
and then went out on my own in2000 as a boutique advisory firm
called Business Recovery Solution.
That was for most of the naughties.
And then in 2008, I was invited tobecome a partner of RNG Partners,
(01:51):
which was Small four partner firm.
In 2013, we merged with SV Partners,which was again another national firm.
And then in October of 22, I recreatedinsolvency options and started
with my small team in our officesdown in the uh, Sutherland s Shire.
When you started the new business wasthe riding on the wall as as such,
(02:15):
like, you know, there we were kindof in the midst of COVID around that
time and when the landscape kind ofchanged, when all of a sudden there
was an influx of people startingbusinesses as well as some artificial,
I guess, boosts from the government.
Was it obvious at the time to youthat this was gonna be an opportunity?
(02:35):
Traditionally we get busy duringa recovery 'cause there are a
lot of businesses that don't havethe right capital, if they've got
capital at all to continue and orsurvive through a, uh, downturn.
And COVID wasn't anythingdifferent to an economic downturn.
So what we've found that with myhistory, with my referrers, the people
(02:58):
that I work with, it just made senseto pivot and adjust my business.
To move forward to cater for all the workthat I was getting and continue to get.
And before we get into all of the detailsthat we're gonna do in the podcast
series, but I'm just intrigued about you.
Tell everyone a little bit about why didyou get into this area, why insolvency?
(03:21):
I mean, you know, most people startout wanting to just be accountants.
Uh, uh, typical kind of accountantsof individuals and small businesses.
Why get into this specific niche?
I pretty much fell into it.
Having come outta school andapplied for many jobs, I received
two offers in the accounting field.
Another one was more of an accountstype, department type role, and this
(03:45):
one was straight into insolvency.
So from there I saw the opportunity tobe able to gain knowledge, help people
in financial distress, and really that'swhat sort of drives me, is to try and
put a bit of calm in a what can be a verystressful situation for people and help.
Navigate the, uh, the waters, so tospeak, of the particular financial
(04:06):
circumstances that businessesor individuals find themselves.
Must be a challenge at times to nottake that home with you if you like.
You know, you're dealing with otherpeople's stresses and you're trying
to create opportunities, but at theend of the day, it is always going to
be a stressful situation for someonewho finds themselves in that area.
(04:27):
So how do you kind of separate that?
Look, it can be very emotionalbecause you are dealing with
people's livelihoods that is granted.
But the beauty about what I think Ibring to the table is just the clear
thought process and really identifyingthe true issues that need to be dealt
with without, from want of a betterterm, the white noise that's going on
(04:48):
around, around the individuals involved.
So I suppose we better start off aswell by telling people why we've come
about doing the podcast together.
What's the real driver here for you?
I think the real driver for me isgetting information and education
to the marketplace, making sure thatbusiness owners who are struggling
(05:13):
or do have some financial stress areable to get the right information
in a timely manner to help them.
Determine what's best for themto help fix their situation.
Yeah, and it's interesting, isn't it?
Because on one handit's about the numbers.
On the other hand, it's verymuch about the human element.
The human element's a big thing,particularly where business owners
(05:36):
have invested in most instances, theirwhole adult life into their business.
So then to have a, an event whichcan be a financially crippling
event in the twilight of their life.
It can.
It is a major burden and itdoes impact the household.
So it's all about, in my view,trying to help these business
(06:01):
owners through the tough times.
So let's probably start at the beginningthen, in terms of, for people wanting
to understand this space a littlebit more, because I guess typically
they start seeing there's an issue.
And people throw termslike insolvency around.
Why don't we define it forpeople as a starting point?
(06:23):
Sure.
So insolvency is a situation wherebusinesses or individuals simply cannot
pay their debt as and when they fault you.
That's the technical term for insolvency.
And you know, practically you'llsee that in your business where
there isn't enough money coming in.
To the bank account to enableyou to pay your debts that are
(06:46):
there, that are due to be paid.
And what you end up finding is that thesebusiness owners will just start delaying
the payment of their creditors and thenthe whole circular dynamic moves on.
And it sort of steamrolls, doesn't it?
Because the problem is, is indelaying things, you're often then
paying more on credit cards and otherareas where you might be borrowing.
(07:09):
So the debt just increaseswhen you're doing that.
Yes it does.
And you know, interest is a big thing.
We have certain creditors maybe able to apply interest to,
to their debts outstanding.
Uh, certainly the tax officeapplies a interest charge to
any monies overdue to them.
Banks, you know, if you're relying on yourbank or your mortgages working capital,
(07:31):
there's an interest component there.
So what comes with a cashflow shortagealso comes with additional cost.
Yeah.
I mean, that's a big thing, isn'tit, for people and, and do you find
that people have got their headaround what this actually means?
I mean, what is the state of mindwhen people are coming to you?
(07:52):
Generally, when people come tome quite often, it's too late.
I often say if business owners haveapproached me 6, 9, 12 months earlier,
there may have been a business to salvage.
There may have been an opportunityto turn around the business.
But unfortunately what we find is thatby the time business owners recognize or
(08:15):
really admit that they have a problem,they are really at the 11th hour and
they've exhausted all resources that theyhave that they could have used earlier to
actually properly address the situationand affect a, a successful turnaround.
I mean, it's bringing in the experts atthe right time, which is important for
business in, in all aspects, isn't it?
(08:36):
I mean, that's the, that's one of the keylessons I think for business owners that
whether your business is thriving or youknow, barely surviving or going backwards,
it's when to call in the expertsin different areas is so important.
This is very true.
You look at, you look at a lot of thesuccessful businesses, they will have
advisors, albeit accounting, albeit.
(08:58):
Legal, albeit specialized technicaladvisors to ensure that the business
continues in a positive, uh, manner.
Yeah, and, and I think the questionof timing, I mean, it's easy to
look back in hindsight, right?
It's easy to go back and say,well, they should have contacted
me six or nine months earlier.
But if you're a business owner,you're listening into this, how do
(09:19):
you know when it's the right time?
Well, the right time in myview is when you may see that.
For at minimum, you have gone through twoquarters of trading, IE two BA returns
have been launched, and you're findingthat your cashflow is becoming tighter
(09:40):
and tighter, and where you are havingto negotiate repayment arrangements
with the tax office, for instance, oryour age payables, your creditors have
moved out from say 30 days to 60 days.
When you notice a few of thoselittle telltale sign, that's when
business owners really need to puttheir hand up and seek some advice.
(10:04):
And you know, the ability to payyour creditors comes from the
receipt of funds from your debtors.
So, you know, if you find thatyour debtors are outside terms and
they're in turn starting to drag andpay 60 days as opposed to 30 days.
There's a few little signs that can promptyou to say, Hey, do I have a real issue?
(10:27):
Is it an industry issue, oris it just a customer specific
issue that I need to address?
Yeah.
And I guess, is it scary for people torecognize, firstly, that there are some
issues there, but secondly, to go tosomeone in the insolvency space, is that
a mental barrier for a lot of people?
Oh, look, I don't doubt thatthat is a mental barrier because.
(10:49):
The term insolvency is notendearing to many people, right?
Everybody would like to think that theytrading well and business is going well,
but ultimately an insolvency professionalthat you've probably best equipped to look
at your financial position and actuallyprovide you with some ideas on what needs
(11:11):
to be done and what needs to be looked atinstead of being there as the last resort.
Insolvency professional canactually assist you even if as a
second set of ears, so to speak,to just review and, uh, provide an
opinion on how you were trading.
I think to your point earlier aboutleaving things too late and not
(11:34):
being able to rescue them, and wesee it all the time, the headlines
of major brands that we are familiarwith, and we see that no buyers.
For them and that they arejust gonna shut the doors.
And that happens quiteregularly at a big brand level.
So I imagine it doesn't get anyeasier in the smaller size business.
Certainly doesn't.
(11:54):
No.
No.
And what you often find is that thesmallest size business, because they
are so key person dependent, dependentupon the owners key director and the
like, the ability to sell those typesof businesses are going in concern.
Far more reduced than a larger business,which operates autonomously that with
(12:17):
a few small changes, the profitabilitycan be returned to that business.
So let's just establish a bit of aframework from the beginning then,
and say, okay, I'm in a situationwhere maybe I need some assistance.
What happens when they comeand knock on your door?
What are the kinds of things, what are thelevers that you can pull at the early sta?
(12:40):
Those sort of early stages?
I think the early stage for me ishaving an updated set of financial
accounts to enable us to sit downand just review the historical trade.
Because at the end of the day,it all does come down to what the
cost of doing business is and areyou achieving sufficient income?
(13:02):
To cover that cost.
That's the first thing you know.
There may be some businesses where they'vehad a significant bad debt, which is
an isolated event that has adverselyand financially impacted the business.
Then that's a really simplesolutions to then address that
short term cashflow issue.
(13:23):
However, if there are some systemic issueswithin the business where profitability
has not been there over a period of time.
It is certainly then harder to find asolution to help fix the underlying issue.
So it's coming back to it.
It's all about having the financialsavailable to identify what the issues are.
(13:46):
Then once we've identified what the issuesare, we can then look at the solutions
available to address those issues.
I think the important thing here aswell is that I imagine someone who's
got the expertise that you do, thereare things that you can see in the
financials that other people may not see.
Well, having done this for 35years and most in soy practitioners
(14:08):
would not be dissimilar to myself.
You see a lot having investigatedthe reasons for failure.
So having identified the reasonsfor failure in businesses that have.
Previously gone into liquidation, we sortof have the, an idea of what we should
be looking for to identify what the ruleissues are, and that's effectively what
(14:29):
an insolvency practitioner can bring tothe table is to, you know, readily and
expediently identify what the issuesare, to then work out and determine
what solutions, uh, are available.
So just to wrap up this part of thediscussion, talk to me about the
difference between the types of insolvencythat there are, 'cause there personal
(14:51):
and there's corporate, so, and there's animportant differentiation between those.
Yes, there are, you know,personal insolvency relates to
individuals, an individual whois unable to pay their debts.
The real generally, the onlyoption for a person who's unable
to pay their debts is bankruptcy.
There are.
(15:11):
Two alternatives to bankruptcy, onebeing a personal insolvency agreement,
the other being a debt agreement,and they are alternatives which
can enable an individual to avoidbankruptcy and based on their asset
and liability position, it providesfor the repayment of their creditors.
(15:32):
Not in full, but certainly providesfor a better return than what a
bankruptcy scenario would provide for.
Corporate insolvency.
The liquidation is the maintype of insolvency where the
business is ultimately wound up.
(15:52):
The appointment can be either voluntaryor via a one a company's creditor
pursuing a debt and appointinga liquidator through the court.
Alternatives to liquidation again.
To provide a better return tocreditors, uh, either a small business
restructure, which is limited by thesize of the liability owing, and a few
(16:15):
other criteria, such as total debtsbeing less than a million dollars,
superannuation being paid up to date,and all the statutory lodgements
tax, lodgements bas, income tax, andthe like are all up to date as well.
The other alternative to liquidationis a voluntary administration.
One of the outcomes of a voluntaryadministration is a deed of company
(16:38):
arrangement where an offer is madeto the creditors, which provides
for a greater return to creditors.
Thus allowing the business tocontinue to trade into the future.
So they're the really, the two differencesbetween corporate and personal insolvency.
Well, that's it for this episode ofthe IO Insolvency Options Podcast.
(17:01):
I hope you've got plenty of valuableknowledge and practical steps for whatever
your situation is from Darren today.
And if you need guidanceon insolvency matters.
Contact Darren Vadidirectly@insolvencyoptions.com
au or call 1804 6 3 3 2 8.
Or of course, you could connectwith Darren on LinkedIn details
in the show notes below.
(17:23):
With over 30 years of experience,Darren and his team provide personalized
solutions for both personal andcorporate insolvency challenges.
This episode was produced by myteam at podcast done for you.com
au helping professionalsshare their expertise.
Through powerful podcast content.
If you found value in today's episode,please like, comment and subscribe
(17:45):
to the IO Insolvency Options podcast.
Wherever you are listening to this, yourengagement helps us reach more business
owners who need these crucial insights.
Until next time, remember, there's alwaysa way forward when you know your options.
Introduction to Insolvency,understanding the basics.
Welcome to our first episode of ioInsolvency Options with Darren Vadi,
the managing Director of InsolvencyOptions, and a registered liquidator.
With over 30 years of experiencehelping businesses and individuals
navigate financial challenges.
In today's episode, Darren shareshis journey into insolvency explains
(00:25):
what insolvency actually means.
And reveals the warning signs everybusiness owner needs to recognize.
We'll explore when to seekhelp and the difference between
corporate and personal insolvency.
You'll understand thefundamentals of insolvency.
Know when to seek professionaladvice and learn why acting
early gives you the most options.
I'm your co-host, Anthony Pearl.
(00:46):
Let's dive into unlockingmore about insolvency options.
Well, first of all, Darren,welcome to your podcast.
Thank you.
Thank you very much.
I think we need to kick things offreally by introducing yourself properly
to the audience, and why don't youtell everyone a little bit about
who you are and where it all began.
(01:09):
Yeah, sure.
So it all began a bit over 35 years ago,having come straight out of high school.
I.
Applied for many accounting roles withvarious firms throughout Sydney and
was fortunate enough to be acceptedto a one of the largest firms at
that time, which was Ferer Hodson.
(01:30):
And so from there I worked throughthe nineties in smaller firms
and then went out on my own in2000 as a boutique advisory firm
called Business Recovery Solution.
That was for most of the naughties.
And then in 2008, I was invited tobecome a partner of RNG Partners,
(01:51):
which was Small four partner firm.
In 2013, we merged with SV Partners,which was again another national firm.
And then in October of 22, I recreatedinsolvency options and started
with my small team in our officesdown in the uh, Sutherland s Shire.
When you started the new business wasthe riding on the wall as as such,
(02:15):
like, you know, there we were kindof in the midst of COVID around that
time and when the landscape kind ofchanged, when all of a sudden there
was an influx of people startingbusinesses as well as some artificial,
I guess, boosts from the government.
Was it obvious at the time to youthat this was gonna be an opportunity?
(02:35):
Traditionally we get busy duringa recovery 'cause there are a
lot of businesses that don't havethe right capital, if they've got
capital at all to continue and orsurvive through a, uh, downturn.
And COVID wasn't anythingdifferent to an economic downturn.
So what we've found that with myhistory, with my referrers, the people
(02:58):
that I work with, it just made senseto pivot and adjust my business.
To move forward to cater for all the workthat I was getting and continue to get.
And before we get into all of the detailsthat we're gonna do in the podcast
series, but I'm just intrigued about you.
Tell everyone a little bit about why didyou get into this area, why insolvency?
(03:21):
I mean, you know, most people startout wanting to just be accountants.
Uh, uh, typical kind of accountantsof individuals and small businesses.
Why get into this specific niche?
I pretty much fell into it.
Having come outta school andapplied for many jobs, I received
two offers in the accounting field.
Another one was more of an accountstype, department type role, and this
(03:45):
one was straight into insolvency.
So from there I saw the opportunity tobe able to gain knowledge, help people
in financial distress, and really that'swhat sort of drives me, is to try and
put a bit of calm in a what can be a verystressful situation for people and help.
Navigate the, uh, the waters, so tospeak, of the particular financial
(04:06):
circumstances that businessesor individuals find themselves.
Must be a challenge at times to nottake that home with you if you like.
You know, you're dealing with otherpeople's stresses and you're trying
to create opportunities, but at theend of the day, it is always going to
be a stressful situation for someonewho finds themselves in that area.
(04:27):
So how do you kind of separate that?
Look, it can be very emotionalbecause you are dealing with
people's livelihoods that is granted.
But the beauty about what I think Ibring to the table is just the clear
thought process and really identifyingthe true issues that need to be dealt
with without, from want of a betterterm, the white noise that's going on
(04:48):
around, around the individuals involved.
So I suppose we better start off aswell by telling people why we've come
about doing the podcast together.
What's the real driver here for you?
I think the real driver for me isgetting information and education
to the marketplace, making sure thatbusiness owners who are struggling
(05:13):
or do have some financial stress areable to get the right information
in a timely manner to help them.
Determine what's best for themto help fix their situation.
Yeah, and it's interesting, isn't it?
Because on one handit's about the numbers.
On the other hand, it's verymuch about the human element.
The human element's a big thing,particularly where business owners
(05:36):
have invested in most instances, theirwhole adult life into their business.
So then to have a, an event whichcan be a financially crippling
event in the twilight of their life.
It can.
It is a major burden and itdoes impact the household.
So it's all about, in my view,trying to help these business
(06:01):
owners through the tough times.
So let's probably start at the beginningthen, in terms of, for people wanting
to understand this space a littlebit more, because I guess typically
they start seeing there's an issue.
And people throw termslike insolvency around.
Why don't we define it forpeople as a starting point?
(06:23):
Sure.
So insolvency is a situation wherebusinesses or individuals simply cannot
pay their debt as and when they fault you.
That's the technical term for insolvency.
And you know, practically you'llsee that in your business where
there isn't enough money coming in.
To the bank account to enableyou to pay your debts that are
(06:46):
there, that are due to be paid.
And what you end up finding is that thesebusiness owners will just start delaying
the payment of their creditors and thenthe whole circular dynamic moves on.
And it sort of steamrolls, doesn't it?
Because the problem is, is indelaying things, you're often then
paying more on credit cards and otherareas where you might be borrowing.
(07:09):
So the debt just increaseswhen you're doing that.
Yes it does.
And you know, interest is a big thing.
We have certain creditors maybe able to apply interest to,
to their debts outstanding.
Uh, certainly the tax officeapplies a interest charge to
any monies overdue to them.
Banks, you know, if you're relying on yourbank or your mortgages working capital,
(07:31):
there's an interest component there.
So what comes with a cashflow shortagealso comes with additional cost.
Yeah.
I mean, that's a big thing, isn'tit, for people and, and do you find
that people have got their headaround what this actually means?
I mean, what is the state of mindwhen people are coming to you?
(07:52):
Generally, when people come tome quite often, it's too late.
I often say if business owners haveapproached me 6, 9, 12 months earlier,
there may have been a business to salvage.
There may have been an opportunityto turn around the business.
But unfortunately what we find is thatby the time business owners recognize or
(08:15):
really admit that they have a problem,they are really at the 11th hour and
they've exhausted all resources that theyhave that they could have used earlier to
actually properly address the situationand affect a, a successful turnaround.
I mean, it's bringing in the experts atthe right time, which is important for
business in, in all aspects, isn't it?
(08:36):
I mean, that's the, that's one of the keylessons I think for business owners that
whether your business is thriving or youknow, barely surviving or going backwards,
it's when to call in the expertsin different areas is so important.
This is very true.
You look at, you look at a lot of thesuccessful businesses, they will have
advisors, albeit accounting, albeit.
(08:58):
Legal, albeit specialized technicaladvisors to ensure that the business
continues in a positive, uh, manner.
Yeah, and, and I think the questionof timing, I mean, it's easy to
look back in hindsight, right?
It's easy to go back and say,well, they should have contacted
me six or nine months earlier.
But if you're a business owner,you're listening into this, how do
(09:19):
you know when it's the right time?
Well, the right time in myview is when you may see that.
For at minimum, you have gone through twoquarters of trading, IE two BA returns
have been launched, and you're findingthat your cashflow is becoming tighter
(09:40):
and tighter, and where you are havingto negotiate repayment arrangements
with the tax office, for instance, oryour age payables, your creditors have
moved out from say 30 days to 60 days.
When you notice a few of thoselittle telltale sign, that's when
business owners really need to puttheir hand up and seek some advice.
(10:04):
And you know, the ability to payyour creditors comes from the
receipt of funds from your debtors.
So, you know, if you find thatyour debtors are outside terms and
they're in turn starting to drag andpay 60 days as opposed to 30 days.
There's a few little signs that can promptyou to say, Hey, do I have a real issue?
(10:27):
Is it an industry issue, oris it just a customer specific
issue that I need to address?
Yeah.
And I guess, is it scary for people torecognize, firstly, that there are some
issues there, but secondly, to go tosomeone in the insolvency space, is that
a mental barrier for a lot of people?
Oh, look, I don't doubt thatthat is a mental barrier because.
(10:49):
The term insolvency is notendearing to many people, right?
Everybody would like to think that theytrading well and business is going well,
but ultimately an insolvency professionalthat you've probably best equipped to look
at your financial position and actuallyprovide you with some ideas on what needs
(11:11):
to be done and what needs to be looked atinstead of being there as the last resort.
Insolvency professional canactually assist you even if as a
second set of ears, so to speak,to just review and, uh, provide an
opinion on how you were trading.
I think to your point earlier aboutleaving things too late and not
(11:34):
being able to rescue them, and wesee it all the time, the headlines
of major brands that we are familiarwith, and we see that no buyers.
For them and that they arejust gonna shut the doors.
And that happens quiteregularly at a big brand level.
So I imagine it doesn't get anyeasier in the smaller size business.
Certainly doesn't.
(11:54):
No.
No.
And what you often find is that thesmallest size business, because they
are so key person dependent, dependentupon the owners key director and the
like, the ability to sell those typesof businesses are going in concern.
Far more reduced than a larger business,which operates autonomously that with
(12:17):
a few small changes, the profitabilitycan be returned to that business.
So let's just establish a bit of aframework from the beginning then,
and say, okay, I'm in a situationwhere maybe I need some assistance.
What happens when they comeand knock on your door?
What are the kinds of things, what are thelevers that you can pull at the early sta?
(12:40):
Those sort of early stages?
I think the early stage for me ishaving an updated set of financial
accounts to enable us to sit downand just review the historical trade.
Because at the end of the day,it all does come down to what the
cost of doing business is and areyou achieving sufficient income?
(13:02):
To cover that cost.
That's the first thing you know.
There may be some businesses where they'vehad a significant bad debt, which is
an isolated event that has adverselyand financially impacted the business.
Then that's a really simplesolutions to then address that
short term cashflow issue.
(13:23):
However, if there are some systemic issueswithin the business where profitability
has not been there over a period of time.
It is certainly then harder to find asolution to help fix the underlying issue.
So it's coming back to it.
It's all about having the financialsavailable to identify what the issues are.
(13:46):
Then once we've identified what the issuesare, we can then look at the solutions
available to address those issues.
I think the important thing here aswell is that I imagine someone who's
got the expertise that you do, thereare things that you can see in the
financials that other people may not see.
Well, having done this for 35years and most in soy practitioners
(14:08):
would not be dissimilar to myself.
You see a lot having investigatedthe reasons for failure.
So having identified the reasonsfor failure in businesses that have.
Previously gone into liquidation, we sortof have the, an idea of what we should
be looking for to identify what the ruleissues are, and that's effectively what
(14:29):
an insolvency practitioner can bring tothe table is to, you know, readily and
expediently identify what the issuesare, to then work out and determine
what solutions, uh, are available.
So just to wrap up this part of thediscussion, talk to me about the
difference between the types of insolvencythat there are, 'cause there personal
(14:51):
and there's corporate, so, and there's animportant differentiation between those.
Yes, there are, you know,personal insolvency relates to
individuals, an individual whois unable to pay their debts.
The real generally, the onlyoption for a person who's unable
to pay their debts is bankruptcy.
There are.
(15:11):
Two alternatives to bankruptcy, onebeing a personal insolvency agreement,
the other being a debt agreement,and they are alternatives which
can enable an individual to avoidbankruptcy and based on their asset
and liability position, it providesfor the repayment of their creditors.
(15:32):
Not in full, but certainly providesfor a better return than what a
bankruptcy scenario would provide for.
Corporate insolvency.
The liquidation is the maintype of insolvency where the
business is ultimately wound up.
(15:52):
The appointment can be either voluntaryor via a one a company's creditor
pursuing a debt and appointinga liquidator through the court.
Alternatives to liquidation again.
To provide a better return tocreditors, uh, either a small business
restructure, which is limited by thesize of the liability owing, and a few
(16:15):
other criteria, such as total debtsbeing less than a million dollars,
superannuation being paid up to date,and all the statutory lodgements
tax, lodgements bas, income tax, andthe like are all up to date as well.
The other alternative to liquidationis a voluntary administration.
One of the outcomes of a voluntaryadministration is a deed of company
(16:38):
arrangement where an offer is madeto the creditors, which provides
for a greater return to creditors.
Thus allowing the business tocontinue to trade into the future.
So they're the really, the two differencesbetween corporate and personal insolvency.
Well, that's it for this episode ofthe IO Insolvency Options Podcast.
(17:01):
I hope you've got plenty of valuableknowledge and practical steps for whatever
your situation is from Darren today.
And if you need guidanceon insolvency matters.
Contact Darren Vadidirectly@insolvencyoptions.com
au or call 1804 6 3 3 2 8.
Or of course, you could connectwith Darren on LinkedIn details
in the show notes below.
(17:23):
With over 30 years of experience,Darren and his team provide personalized
solutions for both personal andcorporate insolvency challenges.
This episode was produced by myteam at podcast done for you.com
au helping professionalsshare their expertise.
Through powerful podcast content.
If you found value in today's episode,please like, comment and subscribe
(17:45):
to the IO Insolvency Options podcast.
Wherever you are listening to this, yourengagement helps us reach more business
owners who need these crucial insights.
Until next time, remember, there's alwaysa way forward when you know your options.
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