Insolvency is a highly specialised area of accounting and, practically, is close to a hybrid profession between commercial law and management consulting. The truth is that there is very little “number crunching” in insolvency work and lots of investigative research and asset recovery work.

Perhaps the biggest issue in insolvency is that we don’t work on client files.  We have business relationships with accountants, lawyers, business advisors and bankers. When their clients find themselves in financial difficulty, they refer those clients to us for assistance.

Now, that might sound like the accountant’s client then becomes our client. But that’s not really the case. This is because, for businesses in financial difficulty, the key stakeholders are the creditors – the people owed money. So, really, the biggest stakeholders in this drama are creditors of companies or individuals who owe them money and they are ultimately our operational “clients”.

In general, insolvency is a “black box” profession – no-one really knows what happens inside insolvency firms. The theory is that is works like this:

  • The insolvency practitioner is engaged to take charge over a company or over an individual’s affairs (their estate).
  • The insolvency firm takes control of the relevant assets and realises (sells) them.
  • The insolvency firm conducts an investigation and provides reports to creditors and to the regulatory authorities; either the Australian Securities & Investments Commission (“ASIC”) for companies or to the Australian Financial Security Authority (“AFSA”) for individuals.
  • The insolvency firm receives the costs and expenses of the administration from the assets available and then distributes the residual funds, if any, to creditors.

Practically this usually means that creditors receive a small, or often zero, distribution from insolvency administrations. As for the director of debtor companies, the worst outcome for creditors means the worst outcome for them – they’re left with personal guarantee obligations that they probably won’t be able to meet and so they become forced to consider personal insolvency management options.

BPS Recovery and Reconstruction takes a different approach to insolvency management.  We work with individuals and businesses in financial difficulty with the core objective of delivering the best possible outcome from a demanding situation.  That might mean utilising the various provisions of the Corporations Act or the Bankruptcy Act and going through the Courts; or it might mean negotiating a commercial solution to a financial problem.  Our first step is to understand the situation, and then we can outline the options available to achieve the best possible outcome.

To learn more about the various types of engagement that we accept, click the link below:

  • Informal Solutions
  • Secured Creditor Appointments
  • Voluntary Administrations
  • Liquidations
  • Bankruptcy
  • Personal Insolvency Agreements