Voluntary administration

BRI Ferrier is a leading provider of recovery services to insolvent or financially distressed businesses using the voluntary administration process.

Voluntary administration offers breathing space for organisations, so they can reorganise their financial affairs and potentially save their business. When appointed as voluntary administrator, we work closely with boards of directors, financiers, employees, unions, creditors, suppliers and other stakeholders to identify exposures, mitigate risks, strengthen core operations and maximise returns to creditors. 

We carry on a company’s business where it is viable, assessing its profitability, developing strategies for future viability, investigating and reporting on all possible recoveries, and recommending the best options to creditors for maximum returns.

Where a company can be restructured, a deed of company arrangement (DOCA) is typically used to formally compromise the debts owed and return the company to a solvent position. A DOCA is a flexible arrangement that can be tailored to suit the needs of the company being restructured, with the aim of continuing the business as a ‘going concern’ and, ideally, to turn around its financial situation.

We can also incorporate a creditors’ trust into a DOCA and accelerate a company’s exit from administration. A creditors’ trust is an independent arrangement where the creditors receive rights as beneficiaries of the trust in place of their claims against the company. This mechanism can be used to immediately return the company to solvency and assist ongoing trading after voluntary administration.

BRI Ferrier has extensive experience in achieving successful recovery outcomes through voluntary administration and DOCA across many industries.

 

CASE STUDIES

King of Knives

The King of Knives Group – which sold knives and cookware in around 60 stores (including 14 franchisee operations) across Australia and New Zealand – struggled due to the tough retail climate. The group was burdened with unprofitable stores and cash flow pressure due to excessive rent and payroll costs. Ultimately, the financier withdrew its support, prompting an urgent need to restructure the business’s finances and operations. The group appointed BRI Ferrier as voluntary administrator and we rationalised the business to excise underperforming elements and leave a viable core operation. Through a concurrent DOCA incorporating a creditors’ trust, the business was returned to the directors as a solvent viable operation.

National Buildplan Group

In 2013 National Buildplan Group Pty Ltd (NBG) was a construction business with eight offices across Australia, 179 staff, substantial government-related accreditations and 132 contracts on foot in various stages of completion. The company owed around $10 million to its secured creditors, $3.3 million to employees (potentially more with forced redundancies), and $58 million to ordinary unsecured creditors (including sub-contractors and tax authorities). Its overall deficiency of assets was around $58 million. BRI Ferrier was appointed as voluntary administrator and assessed that, if liquidated, the company would provide no return to unsecured creditors while employees would lose up to 60% of their claims. We resolved, instead, to restructure NBG using a DOCA and creditors’ trust, creating a settlement fund using proceeds recovered from NBG contracts and a contribution of funds from the company’s director. In return NBG was released from its debts, was able to continue to work out contracts and retain valuable accreditation rights. The creditors’ trust resulted in the secured creditors and employees being paid in full and remaining unsecured creditors receiving a dividend significantly greater than could be achieved in a liquidation.

Redmond Drilling

Redmond Drilling, a mining contractor in Kalgoorlie, appointed BRI Ferrier as voluntary administrator. With creditors owed $1.7 million, a DOCA was administered. A successful turnaround strategy then ensured creditors received 100 cents in the dollar and the return of the company to the director to resume profitable trading.

FEA Group

Forest Enterprises Australia Limited (FEA Group) was the third largest of the forestry managed investment schemes to collapse in Australia. The group provided a tax-driven product that enabled retail investors (growers) to acquire woodlots for planting, maintaining and harvesting trees. It became insolvent in April 2010 and BRI Ferrier was appointed as voluntary administrator. The group was subject to approximately $1 billion of stakeholder claims, including grower claims of around $420 million in 17 separate schemes (trusts), and claims by the group’s banking syndicate of around $265 million. After protracted negotiations with the banking syndicate and receivers, BRI Ferrier devised a DOCA, which averted costly litigation by facilitating a sale of encumbered land, with the potential to return over $30 million to growers. The outcome of the FEA Group administration turned conventional practice on its head by successfully recognising growers as significant stakeholders. Previous failed agricultural and forestry managed investment schemes had resulted in no return to growers.

Regional South Australian airline

A South Australian airline was responsible for delivering the daily newspaper and essential blood supplies to regional hospitals. When it experienced financial challenges, BRI Ferrier was appointed as voluntary administrator. While complying with Civil Aviation Safety Authority (CASA) requirements, we maintained regular deliveries while negotiating a successful sale of the business. Subsequently, all surplus aircraft were sold, and all pilots and staff retained their positions. Creditors received a minimal dividend and crucial state services continued to regional areas.

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