News


  • A.C.N. 113 004 023 Pty Ltd (Traded as Nature’s Energy) (In Liquidation) (“the Company”)

    Creditor Reports29/06/2020

    On 19 August 2019, Riad Tayeh and Antony Resnick were appointed Joint and Several Liquidators of the Company.

    By proceeding to view information about the Company, you are declaring that you are an investor, creditor or professional adviser for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law.

    To view the Liquidators report dated 29 June 2020, click here … Creditor Report dated 29 June 2020

    If you believe you are a creditor of the company, or if you hold information which may assist the Administrators with their investigations into the affairs of the Company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Clibe Metal Fabrications Pty Ltd (In Liquidation) A.C.N. 622 829 967

    Creditor Reports25/06/2020

    On 22 July 2019, Riad Tayeh was appointed Liquidator of Clibe Metal Fabrications Pty Ltd (In Liquidation) A.C.N. 622 829 967

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional adviser for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the Company can access a copy of the Report to Creditors dated 25 June 2020 using this link … Report to Creditors 25.06.2020

    If you believe you are a creditor of the Company or if you hold information which may assist the Liquidator in his investigations into the affairs of the Company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.”

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  • How does COVID-19 impact business valuations?

    News Articles15/06/2020

    COVID-19’s global spread has affected businesses worldwide, dramatically reducing or even completely stopping business outputs amid an unprecedented demand and supply shock. Growing uncertainty within global markets may drive business owners to evaluate the future of their own business and may turn to conducting valuations on their own businesses to determine their current value. But is now the right time?

    With individuals and businesses coming to terms with a potential “new normal” post-COVID-19, business owners have begun to determine how much of an impact COVID-19 has had on their business. One problem that has arisen for business owners is how to value their business, be it for tax purposes or an eventual sale of a business to an interested party.

    The valuation industry has seen a dramatic impact in recent months as business sales transactions that have originally been in process have fallen through or been delayed prior to settlement. The dramatic fall in global equities during the months of February and March also sheds insight into investor mentality and how sophisticated investors have adjusted their financial projections amid the significant demand and supply shocks rippling through the global markets.

    During these uncertain times, business owners should keep in mind the following points regarding their business if a valuation is required to make sure that they are making decisions based on sound information.

    Timing and purpose for valuation

    Business owners should consider the reasoning behind needing a business valuation, as the timing and purpose of the valuation may affect the proposed value of the business. In an ideal scenario, parties to a business sale transaction would seek to determine the fair market value of a business through an orderly arm’s length transaction, with both parties free of any pressure to buy or sell. However, given the current COVID-19 situation, calculating the fair market value may be difficult to determine as there may be no “market” to sell the business to, considering the minimal amount of business sale transactions occurring. Sales being conducted in the current market may be seen as “forced sale” transactions, attracting a “forced sale” valuation, which may significantly undervalue the fair market value of the business.

    Business owners and their advisors must evaluate the time frame that a valuation is needed to prevent any undervaluation of the business.

    Type of business

    A common theme among business owners is the notion that the enormous demand fall-off for goods and services within the hardest-hit industries, e.g. tourism, consumer discretionary and hospitality, will result in a lower market valuation for these businesses. While businesses in these industries will most likely under perform in the short term compared to the rest of the market, prudent investors will take into account the future maintainable earnings of the businesses post-COVID-19 as well as the individual businesses’ financial position, including its debt profile, as these factors will inevitably dictate the fair market value of the business. A business with a strong balance sheet and minimal debt will be able to weather the COVID-19 storm far better than a business which is highly leveraged, despite being in the same industry.

    Business owners seeking valuations on businesses in these hardest-hit industries must keep an eye on their expenses during these times to normalise the future maintainable earnings of the business once the COVID-19 effects on the business have subsided.

    Methodologies for valuation

    Short term impacts on a business will not have a material effect on the value, as these impacts would be allowed for and adjusted.  However, some business sectors (particularly those in travel and hospitality, for example) are expected to have some longer-term impacts and it would be appropriate to consider how these businesses should be valued.

    Most established businesses pre-COVID-19 would be expected to have their enterprise value determined as a multiple of their historical earnings. Currently, this method for valuation purposes would likely overestimate the valuation of the business given that their prior historic earnings would not be reflective of their future earnings in this current environment.

    Other valuation methodologies may need to be employed in circumstances like these, such as using an income-based valuation method (such as the discounted cash flow method). However, a significant drawback of this method is that small businesses usually do not prepare detailed cash flow forecasts on a multi-year basis, with the extent of many budgets only being forecasted for one year or less.

    Business owners who are interested in valuing their business should seek to perform long term forecasts on their business’s financial performance and adjust for the COVID-19 effects on the business in the short term.  This is also a great opportunity for business owners to sit down with their accountants and advisors, and really think and plan their future!

    If you would like to know more and find out what options you might have, please contact Suelen McCallum at dVT Group on 02 9633 3333, or by email mail@dvtgroup.com.au

    dVT Group is a business advisory firm that specialises in business turnaround, insolvency (both corporate and personal), business valuations and business strategy support. 

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  • Reduced number of bankruptcies during Coronavirus. Is this good news and what happens come September?

    News Articles

    Changes to the bankruptcy laws have kept creditors of individual debtors at bay, and government assistance has probably staved off the need for a debtor to voluntarily seek bankruptcy protection. This has created an environment of hibernation.  The focus is on what happens next!

    In a time of economic crisis which we are experiencing, there has been an abundance of support and attention given to helping businesses experiencing financial difficulty.  However, for every one business that has been affected, there are hundreds if not thousands of people who have also been affected.  This can be due to one of several reasons such as loss of employment, the collapse of a business, as a result of illness or due to other pressures.

    What are the numbers saying? 

    The Australian Financial Security Authority, which administers the personal insolvency system, has been monitoring bankruptcy figures on a fortnightly basis since March 2020.  It reports that on average, between July 2019 and 22 March 2020, 844 people per fortnight became bankrupt or entered personal insolvency or a debt agreement. When we look at the numbers for the period 23 March to 31 May, right in the middle of COVID-19, the numbers are falling to as low as 586 for the fortnight, 18 May to 31 May.

    This decline in numbers of personal insolvencies in Australia during Coronavirus appears to be good news.  It is most likely due to the high level of assistance given by the Australian government to help those suffering from the financial impact of the pandemic.  They are being assisted in getting through with support such as Job Keeper, rent relief, and repayment deferrals.

    The ATO has also indicated that it is taking a more lenient approach to pursuing its debts owing in this environment.  This will inevitably change.

    But the changes to the bankruptcy laws are only temporary, focused on assisting debtors get through the COVID-19 crisis.  It is more likely that creditors cannot petition for bankruptcy until later in the year, when many anticipate that insolvency numbers will increase after the assistance ends.

    Coronavirus and changes to bankruptcy laws

    These changes were made in three areas:

    Bankruptcy Notice compliance period extended to 6 months and the threshold increased from $5000 to $20,000:

    A Bankruptcy Notice is a formal demand on a debtor for payment to a creditor based on a final judgement or order in the amount of at least $5,000 obtained by that creditor. Previously, a debtor had 21 days to respond to a Bankruptcy Notice and if they failed to do so, the debtor committed an “act of bankruptcy “on which the creditor could base a Creditor’s Petition seeking a Sequestration Order against the debtor.

    The threshold has been increased to $20,000 and the period for compliance has been extended to 6 months.  These changes applied to any notices issued on or after 25 March 2020.

    From a creditor’s perspective, these changes are effectively preventing creditors pursuing bankruptcy petitions during this period, which means there will be fewer bankruptcies by way of court order.  As a consequence, debtors will be less inclined to seek their own bankruptcy at present.  These temporary measures will no doubt provide some relief to those debtors in financial hardship, but they are only temporary, and the debts in question remain owing.  It is not a panacea!

    Come 25 September, all these restrictions on creditors will be removed; that is, unless the government decides to extend that 6-month period of grace.

    Temporary debt protection:  Creditors are also further restrained form recovering their debts through what is termed temporary debt protection.

    Those debtors experiencing financial difficulty can be proactive and apply to AFSA for “temporary debt protection” for a period of 21 days. This protection precludes unsecured creditors (including sheriffs) from taking enforcement action to recover the money, such as garnishing a debtor’s wages or having the sheriff seize their goods.

    The 21-day period has also been increased to six months.

    This provides the debtor with additional time to obtain advice, negotiate a payment plan with creditors or to consider formal insolvency options.

    It is important to note that application for temporary debt protection is an act of bankruptcy and a creditor could consequently use it in order to make an application to the court to bankrupt a debtor.

    The temporary debt protection does not apply to certain debts, such as child support payments, HELP debts or fines imposed by a court.

    Again, this extended period is only temporary and when the 6 month time period ends, the temporary debt protection will offer a debtor only the original 21 days protection.

    What happens come September?

    While these changes are no doubt proving useful for debtors, they should not see this period merely as one of hibernation.  Debtors should use this period of time to try to sort out their financial difficulties.

    The time will soon come when government assistance and the legal protections will end, in some cases, perhaps sooner. If an individual is experiencing financial difficulty, the key is not to wait until it’s too late to be in control of the process.  Obtaining early advice is crucial and can make the difference as to what options are available, with the view of getting the best outcome possible.

    We at dVT understand that the recent months have been financially difficult for many people, in business and in their personal circumstances.  We are in unchartered waters and expert and individual advice will often be needed. Entering bankruptcy or any type of insolvency is a serious step for a person to take and is one that should not be made lightly, and there may be other options.

    dVT Group has three bankruptcy trustees who work with all parties involved to achieve the best outcome possible.

    Please call dVT to seek early advice in the form of a free initial discussion to consider and explain the options available and their consequences, 02 9633 3333 or mail@dvtgroup.com.au

    Special thanks to Michael Murray for his contribution to this article. 

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  • Glemaro Pty Ltd (Subject to Deed of Company Arrangement)

    Creditor Reports14/06/2020

    Riad Tayeh & David Solomons were appointed Deed Administrators of Glemaro Pty Ltd ATF Glenn & Marouda Family Trust t/as Open Plains Wholesale Pork (Subject to Deed of Company Arrangement) on 1 April 2014.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional adviser for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the Company can access a copy of the Report to Creditors dated 12 June 2020 using this link …. REPORT TO CREDITORS

    Should you require any further information, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.”

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  • Motorcorp Smash Repairs Pty Ltd (In Liquidation) A.C.N. 135 215 182

    Creditor Reports12/06/2020

    On 11 April 2018, Riad Tayeh & Suelen McCallum were appointed Liquidator of Motorcorp Smash Repairs Pty Ltd (In Liquidation) A.C.N. 135 215 182.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional adviser for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the Company can access a copy of the Report to Creditors dated 12 June 2020 using this link …. Report to Creditors dated 12th June 2020

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • A.C.N. 169 594 094 Pty Ltd (Formerly Regal Health Group Pty Ltd) (Administrators Appointed) (“the Company”)

    Creditor Reports01/06/2020

    On 4 May 2020, David Solomons and Antony Resnick were appointed Joint and Several Administrators of the Company.

    By proceeding to view information about the Company, you are declaring that you are an investor, creditor or professional adviser for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law.

    To view the Administrators report dated 29 May 2020 for the second meeting of creditors, click here … Administrators report 29 May 2020

    If you believe you are a creditor of the company or if you hold information which may assist the Administrators with their investigations into the affairs of the Company, please do not hesitate to contact Mitchel de Vries of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • ACN 631 636 078 Pty Ltd (Formerly Regal Home Health Pty Ltd) (Administrators Appointed) (“the Company”)

    Creditor Reports

    On 4 May 2020, David Solomons and Antony Resnick were appointed Joint and Several Administrators of the Company.

    By proceeding to view information about the Company, you are declaring that you are an investor, creditor or professional adviser for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law.

    To view the Administrators report dated 29 May 2020 for the second meeting of creditors, click here … Administrators report dated 29 May 2020

    If you believe you are a creditor of the company or if you hold information which may assist the Administrators with their investigations into the affairs of the Company, please do not hesitate to contact Mitchel de Vries of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Rooke Homes Pty Ltd (In Liquidation) A.C.N. 117 554 542

    Creditor Reports27/05/2020

    On 23 March 2020, Riad Tayeh was appointed Liquidator of Rooke Homes Pty Ltd (In Liquidation) A.C.N. 117 554 542.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional adviser for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the Company can find the Statutory Report to Creditors dated 27 May 2020 available here:  Statutory Report dated 27 May 2020

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • J.A. Tighe Pty Ltd (Administrator Appointed) A.C.N. 132 619 455

    Creditor Reports

    On 18 February 2020, Riad Tayeh and Suelen McCallum were appointed Voluntary Administrators of J.A Tighe Pty Ltd (A.C.N. 132 619 455).

    By proceeding to view information about J.A Tighe Pty Ltd, you are declaring that you are an investor, creditor or professional adviser for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find a report to creditors available here:  19.02.20 – Intial report to creditors

    Creditors of the company can find a second report to creditors available here: Second Report To Creditors dated 17.03.2020

    Creditors of the company can find a supplementary 2nd report to creditors here Supplementary Report to Creditors dated 20 May 2020

    Creditors of the company can find a further update in relation to the directors amended DOCA proposal here:  Further update to Creditors dated 27 May 2020

    If you believe you are a creditor of the company or if you hold information which may assist the administrator in their investigations into the affairs of the company, please do not hesitate to contact Troy Graham or Sayed Saad of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Badam Trading Co Pty Ltd (In Liquidation) A.C.N 154 336 071

    Creditor Reports

    We advise that on 22 May 2020, David Solomons was appointed Liquidator of Badam Trading Co Pty Ltd (In Liquidation) A.C.N 154 336 071.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional adviser for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Based on the records of the company, you are an unsecured creditor. Please send your completed proof of debt, any enquiries you have, and your electronic contact details to badam@dvtgroup.com.au.

    To obtain a copy of the proof of debt form to lodge a claim against the company, please click here …  Proof of Debt form.

    To view the Liquidators initial report to creditors dated 5 June 2020, click here …  Initial Notice to Creditors 5th June 2020.  

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to forward an email to badam@dvtgroup.com.au.

     

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  • Freshpac Solutions Pty Ltd (In Liquidation)

    Creditor Reports26/05/2020

    We advise that on 26 May 2020, Riad Tayeh was appointed Liquidator of Freshpac Solutions Pty Ltd.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional adviser for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    To view the Initial Report to Creditors dated 26 May 2020, click here…  Initial Report to Creditors dated 26 May 2020

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Luxe Beaute Penrith Pty Ltd (In Liquidation) A.C.N. 629 297 730

    Creditor Reports22/05/2020

    On 11 March 2020, Riad Tayeh was appointed liquidator of Luxe Beaute Penrith Pty Ltd (In Liquidation) A.C.N. 629 297 730

    By proceeding to view information about Luxe Beaute Penrith Pty Ltd, you are declaring that you are an investor, creditor or professional adviser for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find the Statutory Report for Creditors dated 22 May 2020 available here:  Statutory Report to Creditors dated 22 May 2020

    If you believe you are a creditor of the company or if you hold information which may assist the administrator in their investigations into the affairs of the company, please do not hesitate to contact Jenny Stojanoska of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Changes to insolvent trading – are we safeguarding or impacting the problem and delaying the inevitable?

    News Articles15/05/2020

    In one of our recent articles, we outlined in a nutshell the extensive Federal and State packages available to assist businesses in these difficult times, including JobKeeper, cash flow boosts and various business grants available.

    However, we are finding that whilst this Government assistance is providing temporary support and relief for many businesses, it may not be enough!  Read more in last month’s article …  Government Support packages offer great help, but what other options are also available for businesses?

    For businesses experiencing financial distress, the Australian Federal Government has also introduced a six-month suspension of insolvent trading laws.  The objective of these laws is to help businesses who are otherwise profitable and viable to get through to the other side of COVID-19.

    Changes to Insolvent trading: 

    • From 25th March, the statutory timeframe for a company to respond to a statutory demand was extended temporarily from 21 days to six months;
    • An increase to the current minimum threshold for creditors issuing a statutory demand on a company from $2,000 to $20,000;
    • Suspension of director’s personal liability for insolvency trading during this time (however be aware of the detail, as this is not a get out of jail free card!);
    • Additional Safe Harbour provision.

    It has recently been reported that the government is considering extending the six-month insolvent trading period by a further six months. 

    How will businesses and the market be affected?

    We can see some areas of concern here.  Riad Tayeh, partner at dVT Group says “hibernation or delaying the challenges directors and businesses will face at the end of this period (and even more so the extended period) may not be helping safeguard the business. but rather allows the issues to build up, possibly resulting in a worse situation at the end of the period”.

    Riad says, “there is also the concern that if businesses are permitted to trade insolvent during this time, they will be creating a more difficult situation to deal with after the suspension is lifted and may create a position that is too difficult to reverse.  The result is rather than helping, these measures may actually cause the demise of these small to medium businesses, with a ripple effect to other businesses in that sector.  In addition to this, it could create a death spiral, as the viability of businesses that continue to trade and incur debts with these affected businesses, may also become affected, as will their competitors”. 

    Businesses in decline tend to try and trade their “way out” through a price war spiral to try and recover market share at low margins.  This not only distorts the market, but may derail whole sectors of our economy and be fatal to many businesses.

    Cash flow pressure

    The SME sector is heavily reliant on cash flow. There is little in the way of reserves, and capital is often sourced from external sources such as directors’ properties.

    The COVID-19 environment has exposed companies not earning income for say six months with a gradual re-opening over the next six months and potentially fully operational sometime after that.

    The government has encouraged the accrual of a high degree of debt by SMEs, which ultimately needs to be repaid.  If an SME had say a net margin of 10% at full trading and it had accrued costs and overheads of say 10% (of pre-COVID-19 trading) over the shutdown period, it could take more than 24 months to get back to a break even position.

    If we consider an SME will not be profitable immediately on the day it opens its doors again and that it may not become profitable for several months, then we need to consider how it will be able to trade once it is allowed to again.

    The SME will have creditors unpaid from March 2020 onwards.  It is unlikely credit will be extended by suppliers under such circumstances (as the supplier will also have their own issues).  Thus, given the prospect of losses by the SME and a diminished capital position of its shareholders, cash flow loans become a large issue.

    If some form of capital can be raised to allow resumption of trade, it is unlikely to be enough to pay the backlog of creditors, let alone buy much needed supplies or pay wages and overheads.  Consider then, the costs of overheads they would have carried for this period of time on top of the potential trading losses they will endure until trading gets back to normal.

    While JobKeeper may have helped them to be able to pay their staff whilst not earning an income, they will still have;

    • Accrued rent outstanding (to at least 50%)
    • Accrued employee entitlements (super, annual leave, long service leave and personal leave)
    • Accrued overheads (e.g. insurance, subscriptions, utilities, memberships etc.)

    So as the company limps to a potential future profit situation, the six-month moratorium ends and credit claims become an issue.

    If we now add a desperate (and probably insolvent) competitor trying to stave off the inevitable by heavily discounting prices to increase revenue (note not profit), the SME trying to do the right thing is caught in a price war, which can only have one outcome.

    We have destroyed the orderly market and its credit cycles and only companies that are not carrying huge debt burdens will be able to compete in a post COVID-19 marketplace.

    When the cycle restarts, most suppliers will be concerned about getting paid, and if a company has to fund trading and past debts and prepay GST (i.e. before they collect their debtors), then our historical credit cycle may be under pressure (further exacerbated by not being able to chase debtors for six months).

    Companies need to plan how to be able to resume trading.  We need a road map to recovery for SMEs.

    Can Safe Harbour help?

    Safe Harbour was mentioned as an avenue to restructure.  However, we need to understand that the SME market faces different challenges to that of larger corporations.   Safe Harbour has always been a challenging and somewhat costly process for most in this sector in a normal market.  Under these conditions, it may be unworkable.  SMEs often cannot suitably meet the criteria to invoke this process ordinarily, and if they do and fail, they could be exposed to a charge of insolvent trading with diminished defences.  The insolvent trading moratorium may not assist.

    So, these conditions point to a remarkedly different set of circumstances that will come into play post restrictions being lifted, and it is unlikely that an extension to insolvent trading rules is going to assist in underpinning confidence in this sector.  In fact, in the SME sector, it may cause the credit cycle to be all but destroyed, as suppliers need confidence that they will be paid.

    Hibernating and delaying dealing with these issues in business is not an option and should not replace getting the right help at the right time!

    SMEs would benefit more from a well thought out plan to assist in determining how or if they should reopen for business and how it will be funded or whether they can re-open at all!

    If you have clients that may be experiencing any of the above difficulty and need help to work through it and come up with a plan, please contact Riad Tayeh on 02 9633 3333, email mail@dvtgroup.com.au

    dVT Group is a business advisory firm that specialise in business strategy, turnaround, forensic investigations and insolvency (both corporate and personal). 

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  • Leadership in troubled times

    News Articles13/05/2020

    We have heard it said so many times, but “who saw this coming”?  So far 2020 has brought us bushfires, floods and now COVID-19.  Things have definitely changed for us all in some way over the past 4-5 months.

    As leaders, we need to adapt and change as well.  In these times, hands-on, proactive, strong leaders need to stand up and show leadership by taking up the baton and guiding their team through.

    What sort of leader are you? 

    It is a good time right now to think about what sort of leader you are.

    Reactive Leader                                     Proactive Leader

    Unprepared                                             Constantly mapping scenarios

    Unsure                                                      Know what steps to take

    Respond poorly                                      Act quickly and decisively

    Recover slowly                                        Recover rapidly

    Domineering                                            Collaborative

    A proactive leader instils confidence and direction into the future of the business and the team, whilst a reactive leader removes the confidence and offers no direction, hence enhancing the panic.

    Which one are you or which one would you like to be?

    Becoming a proactive leader:

    To be a proactive leader, you need to ensure that you concentrate on the way forward and not get caught up in the “white noise” that surrounds these times via mainstream media and social media. Whilst this is sometimes difficult, you need to be the calming effect.  By this, I mean remove the panic, speak in a calm voice, (slowly and deliberately using simple terms), get the facts rather than get caught up with the hype, and instead look to become the trusted source of the facts.

    Overall, you will need to always have a positive mindset and learn how to calm yourself in all situations by using techniques such as:
    –  breathing exercises;
    –  practising mind control;  and
    –  taking the time to find that calm space before you meet with your team.

    Be mindful that your team is constantly searching for a way forward, and they are relying on you for positivity.  Therefore, to be a good leader, you need to portray confidence, be forthright and always practise control (even if inside this isn’t the case).  Part of this control involves being accountable, responsible and most importantly showing genuine empathy for your team and fellow colleagues.

    A leader in troubled times:

    When facing troubled times, leaders need to make it easy to do business and operate within the current environment.  You need to remove the red tape and intricate structures by allowing your team and your clients to work together in a more harmonious way. Remember, we are in uncharted times and it affects everyone in different ways.

    To be an effective leader in troubled times, you need to ensure that you have your priorities right by:

    • Making sure you look after yourself and that you remain safe and well (as in an aircraft your oxygen mask first)
    • Make sure your family are safe (both personal and work)
    • Help and assist your clients and referrers by being compassionate
    • Offer help in the general community, both where you work and where you live
    • Create useful ideologies

    When communicating remember the following:

    –   only speak if you have something constructive to say and make it brief;
    –   remember the key to communicating clearly is to “make me laugh”, “make me cry”, “make me surprised”.  If you can communicate in this fashion you will captivate your audience;
    –   use clarity by removing the fluff, only use sticky information (the facts);
    –   be mindful of your language;
    –   don’t encourage fear, the use of positive motivating language is the way;
    –   use simple words to deliver a clear message.

    Above all, stay safe, be healthy and be there and available for your team and colleagues.

    Be that shining light they need in times of crisis and in normal times (whatever that will be).

    Become the leader that can be the trusted source of the truth and relied upon in the chaos of the situation.


    dVT Group is a business advisory firm that specialise in business turnaround, insolvency (both corporate and personal), business valuations and business strategy support.   Please contact us should you require any assistance in these areas on 9633 3333 or by email mail@dvtgroup.com.au.  

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  • Safe Harbour – A practical tool for SME directors and their advisers

    News Articles05/05/2020

    What is Safe Harbour?

    The Safe Harbour law reforms were introduced in September 2017. They have proven to be a useful restructuring tool for companies in financial distress that, in the right circumstances, lead to a ‘better outcome’ for the company.

    The aim of Safe Harbour is to encourage directors to turnaround a company in financial difficulty by protecting them from being held personally liable for the company’s insolvent trading. Directors are now encouraged to explore all viable restructuring options for the company, rather than appointing an insolvency practitioner as an administrator or liquidator before fully considering them.

    Our opinion of Safe Harbour

     In dVT Group’s opinion, when implemented correctly, Safe Harbour provides directors with the necessary additional time to seek professional advice and consider all viable options. It is this additional time that avoids the requirement for an immediate appointment of an insolvency practitioner, increases the prospects of a successful turnaround of the company and often provides a better outcome for all stakeholders including employees, shareholders, directors and creditors.

     The aim of Safe Harbour is to provide a ‘better outcome’ for the company

    A ‘better outcome’ is an outcome that is better for the company than the ‘immediate’ appointment of an administrator or liquidator to the company. This test requires a comparison of the estimated return to creditors under an ‘immediate’ insolvency appointment versus the estimated return under the director’s proposed plan, and in the event that the plan proves unsuccessful, the estimated return under a ‘later’ insolvency.

    The Safe Harbour law specifies the following factors in determining whether a course of action is reasonably likely to lead to a ‘better outcome’. That is, whether the director is:

    • Obtaining advice from an appropriately qualified entity (such as dVT Group) who has been given sufficient information to give appropriate advice
    • Developing and then implementing a plan for restructuring the company to improve its financial position
    • Properly informing himself or herself of the company’s financial position
    • Taking appropriate steps to prevent misconduct by officers and employees of the company that could adversely impact the company’s ability to pay all of its debts
    • Taking appropriate steps to ensure the company is keeping appropriate financial records consistent with the size and nature of the company

    Important conditions that must be satisfied to be eligible for Safe Harbour

    The following conditions must be met at all times to be eligible for Safe Harbour:

    • Debts incurred (including in the ordinary course of business and for the specific purpose of the restructure) must be incurred either directly or indirectly in connection with the proposed course of action under the restructuring plan
    • All employee entitlements, including superannuation, must be paid as and when they fall due
    • All tax reporting requirements must be complied with

    What are the factors critical for success?

    We have found that the factors critical for success are that the company:

    • Has a core business that is profitable, or that can be made profitable
    • Has access to sufficient resources to fund the Safe Harbour process
    • Maintains good books and records
    • Has sound corporate governance
    • Tax reporting obligations are current (or can be quickly made current)
    • All employee entitlements are paid (or can be quickly paid)

     What are the available turnaround solutions?

    The turnaround solutions are encompassed in the restructuring plan for the company and typically may include one, two or any combination of the following courses of action (and/or additional actions); implemented at the same or at different times. What courses of action are selected is dependent on the circumstances of the company, the commercial positions of the stakeholders and what resources may be made available to the company:

    • Equity injection / dilution of current shareholders
    • Provision of new debt / restructuring of current debt
    • Implementation of cost savings
    • Divestment of business / non-core assets
    • Funding of litigation to pursue claims
    • Replacement of directors / senior management
    • Renegotiation of lease, license and other key contracts’ terms

    Need help?

    If you would like to know more about Safe Harbour or to find out what options you have available, please contact Mark Robinson at dVT Group on 02 9633 3333, or by email mrobinson@dvtgroup.com.au.

    dVT Group is a business advisory firm that specialise in business turnaround, insolvency (both corporate and personal), business valuations and business strategy support.  

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  • Home & Giftware Pty Limited (Administrators Appointed) A.C.N. 067 912 449 (“the Company”)

    Creditor Reports28/04/2020

    On 23 March 2020, Antony Resnick and Riad Tayeh were appointed Joint and Several Administrators of the Company.

    By proceeding to view information about Home & Giftware Pty Limited (Administrators Appointed), you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law.

    To view the Administrators report dated 28 April 2020 for the second meeting of creditors, click here .. Report to Creditors April 2020

    If you believe you are a creditor of the company or if you hold information which may assist the Administrators with their investigations into the affairs of the Company, please do not hesitate to contact Angus Fraser or Luke Coppin of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Need an expert accountant in the courtroom?

    News Articles15/04/2020
    • Highly skilled and experienced in handling complex matters.   
    • Reliable strategies and impartial approach in every case.
    • Experience and proven success during cross examination in court.

    We use our skills and experience to provide independent expert services that can be relied upon in the following areas:

    SOLVENCY REPORTS

    We are registered liquidators with forensic accounting skills.  Our  insolvency experience gives us a comprehensive commercial perspective to review complex financial transactions and accounts.

    We prepare expert reports that analyse the solvency of a company.

    Our knowledge and reports have been well tested and hold up strongly in court proceedings.  We have appeared as experts in contested litigations and have contributed our expertise to find a solid path forward.

    We are independent, impartial and unbiased. 

    BUSINESS VALUATIONS

    We have been regularly retained to do business valuations relating to:

    • Family law matters
    • Shareholder and estate disputes
    • Corporate restructure
    • Sale agreements & acquisition of a business

    Our grounded and solid valuation principles lead to a logical and fair value of the business.    It is in the diligent gathering, analysis and interpretation of relevant information that is appreciated by barristers and has given us our proven track record.

    • We have appeared as expert testimony in the Federal Court, Family Court, Supreme Court and District Court.
    • Our reports are comprehensive and present complex facts in an easy, logical manner, with great attention to detail.
    • Our rates are highly competitive and we provide upfront quotes and quick turnaround times.

    About our Expert Accountant:

    Suelen McCallum is an accredited Business Valuation Specialist with Chartered Accountants Australia & New Zealand, a Certified Business Valuer with the Australian Valuers Institute and a Registered Liquidator.

    Suelen has the experience and ability to very quickly understand the issues, put forward and evaluate all possibilities and then bring perspective to achieve better solutions.

    Qualifications:

    Registered Liquidator
    Accredited Business Valuation Specialist, Chartered Accountants Australia & New Zealand
    Certified Business Valuer, Australian Valuers Institute
    Member of Chartered Accountants Australia & New Zealand
    Member of the Australian Restructuring Insolvency & Turnaround Association
    Member of the Association of Independent Insolvency Practitioners

    Past Assignments:

    1. We valued numerous businesses as part of an asset pool for a family law matter. Our work involved reporting on complex internal structures and resolving disputes between parties.  We believe our understanding approach and investigation skills were important to bring structure and direction in this matter.      
    1. As an independent expert for the trustee of a bankrupt, we provided evidence in relation to a claim for monies paid into a superannuation fund. It proved that the bankrupt was insolvent at the time of paying the superannuation and that the trustee could start proceedings for recovery.  
    1. We assessed the loss of sales & the increased labour costs from a breach in contract for failure to supply equipment at a manufacturing facility.

    We have been regularly complimented by Barristers and other professionals who have said that what makes us different is “our commitment to high quality, reliable and detailed reports that are easy to understand and the credibility and support that we provide during court proceedings”.

    Geoff McDonald says …  “I am a practising chartered accountant, as well as being a barrister.  I know which expert accountants can be trusted in all aspects of the word. I trust and endorse de Vries Tayeh and the dVT Group.”   

    Contact us for an initial free discussion on (02) 9633 3333
    and ask for Suelen McCallum or Anne Floyd.

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  • Government Support packages offer great help, but what other options are also available for businesses?      

    News Articles06/04/2020

    In these difficult and trying times, with the COVID-19 restrictions on our businesses and personal life, we need to be resilient and stay positive on both accounts.

    Our lives are changing because of COVID-19

    While the travel, hotels, hospitality and entertainment industries have been badly hit, basically losing their entire revenue overnight, it is all industries, all business and all individuals that have been affected.

    Businesses are operating in a completely different dynamic, with staff working from home and attending “video conferencing meetings” with nearly all face to face meetings being abolished.  While operating under these draconian measures, we are in fact losing the personal touch and our focus is shifting to just getting the job at hand done.

    We need to understand what our business needs

    The government has released various rescue packages to assist the business community.  These rescue packages may assist some businesses that were in a reasonable financial state prior to the COVID-19, but unfortunately it may not be enough for all businesses.

    We are seeing profitable businesses, that have been affected by the COVID-19 crisis, with a need to hibernate the business for a time with a view to re-emerge when some similarity of normality returns.

    Listed below are some options that may be considered:

    1.  Holding Deed of Company Arrangement (Holding DOCA):

    A Holding Deed of Company Arrangement allows, amongst other things, for the following terms:

    • Deferment of normal business trading during a defined period of say, six (6) months
    • A negotiated deal with employees
    • A statutory arrangement with creditors
    • Protection for directors against insolvent trading offences
    • Reporting to creditors, to explain the financial situation and proposed courses of action available

    Features of the Holding Deed of Company Arrangement include:

    • Statutory bar to all actions including legal action immediately
    • Conforming with the Corporations Act
    • Creditor involvement, including by vote at a meeting on whether the company should enter the Holding DOCA
    • Instantaneous freezing of creditors and a Deed, binding on all creditors, within as little as four (4) weeks

    Will it be that easy? Of course not, there may be difficulties, but a key feature is that the Corporations Law permits us to be very flexible with the terms.

    2.  The liquidation option:

    Where there is the possibility that a business may be trading insolvent and was already on the road to insolvency when COVID-19 hit, it is crucial to identify this position and avoid delaying the inevitable.  While it is a hard decision to make, liquidation can also provide several benefits to a director:

    • It may prevent a director from becoming personally liable for the company’s tax debts
    • It avoids the personal liability that comes attached to the new “government and bank- backed loans”
    • Your employees’ entitlements may be met in a short period of time through a government scheme while the assets of the company realised

    It ends the worry and your stress in trying to save the business.

    If your client’s business is experiencing financial difficulty, ensure that they seek assistance early, help them understand and obtain the available government assistance, and encourage them to talk to an expert insolvency accountant, like dVT Group, who can provide assistance by discussing the right options for the business.

    Contact Riad Tayeh at dVT Group on 02 9633 3333, or by email mail@dvtgroup.com.au

    dVT Group is a business advisory firm that specialise in business strategy, turnaround, forensic investigations and insolvency (both corporate and personal). 

    Thanks to Rory Muscat for his contribution to this article. 

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  • COVID-19 Government support packages in a nutshell!

    News Articles01/04/2020

    Our dVT Strategy team have put together a summary of all the packages available to assist sole traders and businesses in these difficult times.

    It covers both Federal and State support packages, as well as the various business grants that may be available to assist businesses.

    Click on the relevant links below for detailed information:

    Assistance for sole traders, click here….. Assistance for Sole Traders

    Government measures to support businesses ….. Government Support Summary

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  • Valuable information for directors of companies in financial distress. 

    News Articles

    The impact of the recent drought, bush fires, floods and now COVID-19 is causing significant financial distress to companies. Indeed, for many companies, cash flow has slowed to a trickle or even stopped completely.

    Listed below are the latest information sheets issued by ARITA (Australian Restructuring Insolvency & Turnaround Association) that may be helpful for directors whose companies are experiencing uncertain financial times.  It briefly covers:

    *  Director’s duties when a company is in distress
    *  Determining if a company is insolvent
    *  Temporary relief for financially distressed businesses
    *  Safe Harbour protections

    Click on this link for the information sheet – Directors duties in uncertain financial times ... Director duties.

    Click on this link for the information sheet – An update for accountants guidance to help clients with companies in financial stress (now passed by the Senate) ..Guidance for businesses in financial distress.

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  • Mr and Mrs Jones Pty Limited (Administrators Appointed) A.C.N. 150 914 168

    Creditor Reports27/03/2020

    On 26 March 2020, Antony Resnick and Suelen McCallum were appointed Voluntary Administrators of Mr and Mrs Jones Pty Limited (A.C.N. 150 914 168).

    By proceeding to view information about Mr and Mrs Jones Pty Limited, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find the Initial Information for Creditors dated 27 March 2020 available here:  27.3.2020 – Initial Information for Creditors

    To view the Minutes of Meeting of Creditors dated 10 April 2020, click here ..Minutes of Creditors Meeting dated 10 April 2020

    To view the Minutes of Second Report for Second Meeting of Creditors dated 24 April 2020, click here .. Report to Creditors 24 April 2020

    To view the Minutes of Second Meeting of Creditors dated 5th May 2020, click here Minutes of Second Meeting of Creditors dated 5 May 2020

    If you believe you are a creditor of the company or if you hold information which may assist the administrator in their investigations into the affairs of the company, please do not hesitate to contact Caryl Dias of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Luxe Beaute Penrith Pty Ltd (In Liquidation)

    Creditor Reports12/03/2020

    We advise that on 11 March 2020, Riad Tayeh was appointed Liquidator of Luxe Beaute Penrith Pty Ltd.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional advisor for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    To view the Report to Creditors dated 11 March 2020, click here: Creditor Report

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Director Penalty Notice regime – GST included from 1 April 2020!

    News Articles10/03/2020

    The Director Penalty Notice (DPN) regime has been amended to make directors of a company personally liable for specified taxation liabilities, including GST, wine equalisation tax (WET) and luxury car tax (LCT).   

    These amendments provides the ability for the ATO to make estimates of the amounts outstanding if returns are not lodged.

    The changes apply to tax periods from 1 April 2020, but do not apply to amounts outstanding prior to this date.

    Directors are required to ensure that their company meets their GST obligations by the due date or goes promptly into voluntary administration or liquidation. If amounts remain outstanding on the due date and the company is not in liquidation or voluntary administration, a penalty arises equal to the outstanding tax amounts. The ATO cannot collect the penalty without first serving a DPN giving the director 21 days’ notice to pay the penalty or place the company into voluntary administration or liquidation. If the director does so the penalty will be remitted unless it is a lock down DPN.

    A “lock-down” DPN will apply in relation to GST if a GST return is not lodged or a voluntary administrator or liquidator is not appointed, within three months of the due date. In the same way as for PAYG and Superannuation, once a DPN is locked down, the appointment of a voluntary administrator or liquidator to the company will not remit the director’s penalty.

    These obligations continue to apply to directors who resign, in relation to all tax periods prior to their resignations, where there are amounts outstanding.

    Obligations will be imposed on new directors 30 days after their appointment. The current defences to DPNs of:

    • illness or other good reason, or
    • that the director took all reasonable steps to comply with the obligation

    have been extended to include:

    • that the company adopted a reasonably arguable position and the company took reasonable care in connection with applying the GST Act.

    All of these amendments also apply to Wine Equalisation Tax (WET) and Luxury Car Tax (LCT).

    The ATO have released a draft Practical Compliance Guideline (PCG 2019/D4) in relation to the making of estimates for GST, WET and LCT. The ATO expects to finalise this draft guideline now that the legislation has been passed.

    If you would like to discuss this further, please contact Antony Resnick of dVT Group on 02 9633 3333, or email at mail@dvtgroup.com.au or complete our online contact form .

    dVT Group is a business advisory firm that specialise in business strategy, turnaround, forensic investigations and insolvency (both corporate and personal). 

    Source:  ARITA (27 February 2020) “What you need to know about the new illegal phoenixing legislation” (Schedule 3). 

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  • Could you be reported for overdue business tax debts?

    Uncategorized09/03/2020

    The ATO now has the power to disclose business tax debts to Credit Report Bureaus (CRBs).  Be aware and don’t let this happen to you or your clients.

    A law allowing the Australian Taxation Office (ATO) to disclose tax debt information of businesses, corporate and personal, over AU$100,000 in debt to registered credit reporting bureaus (CRBs) commenced on 21 February 2020.[1]

    According to the Explanatory Memorandum ….

    “This will allow tax debts to be placed on a similar footing as other debts, strengthening the incentives for businesses to pay their debts in a timely manner and effectively engage with the ATO to avoid having their tax debt information disclosed.

    The amendments will reduce unfair financial advantage obtained by businesses that do not pay their tax on time and contributes to more informed decision making within the business community by enabling businesses to make a more complete assessment of the credit worthiness of other businesses”. 

    Credit checks up until now

    Credit checks up until now would not have shown anyone who was dealing with a business that it had large unpaid tax liabilities, which would be an indicator of its lack of financial credentials. So many businesses have used the ATO as their unofficial but very supportive bank, holding on to taxes that should be remitted to the ATO. In many a liquidation, there has often been an unwelcome surprise of ordinary creditors to find that their claims are dwarfed by large accumulated tax liabilities.

    How it will work

    In Disclosure of business tax debts, the ATO explains it will only disclose tax debt information of a business to a CRB if the business meets all of the following criteria:

    • it has an Australian business number (ABN), and is not an excluded entity
    • it has one or more tax debts, of which at least $100,000 is overdue by more than 90 days
    • it is not effectively engaging with the ATO to manage its tax debt, and
    • the Inspector-General of Taxation is not considering an ongoing complaint about the proposed reporting of the entity’s tax debt information

    The ATO will notify a business in writing if they meet the reporting criteria and give them 28 days to engage with the ATO and take action to avoid having its tax debt information reported.

    The Commissioner is not obliged to disclose tax debt information and says he will apply administrative safeguards above and beyond the legislative safeguards in the bill and legislative instrument, before reporting the tax debt information of a business.

    ‘Engaging’ with the ATO

    Businesses which are ‘engaging’ with the ATO to manage their tax debts will not have their tax debt information reported to CRBs. This means the business could have any one of the following:

    • has a payment plan in place and is meeting the terms of that plan
    • has an active Part IVC objection[2] against a taxation decision to which its tax debt relates
    • has an active review with the Administrative Appeals Tribunal (AAT) or an active appeal to the Court against a decision to which its tax debt relates
    • has an active reconsideration of a reviewable decision which may affect the quantum of a non-complying superannuation fund’s tax debt with the relevant regulator
    • has an active review with the AAT a reviewable decision which may affect the quantum of a non-complying superannuation fund’s tax debt  OR
    • has an active complaint lodged with the Inspector-General of Taxation in relation to the tax debt that is, or could be, the subject of an investigation

    The ATO will only provide information to CRBs if they are registered with the ATO and have entered into an agreement detailing the terms of their reporting.

    If you would like to discuss this further, please contact Antony Resnick of dVT Group on 02 9633 3333, or email at mail@dvtgroup.com.au or complete our online contact form.

    dVT Group is a business advisory firm that specialise in business strategy, turnaround, forensic investigations and insolvency (both corporate and personal). 

    Thanks to Michael Murray from Murray Legal for his contribution to this article.

    ===================

    [1]  Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Act No: 95 2019External LinkTaxation Administration (Tax Debt Information Disclosure) Declaration 2019

    [2]  Under the Taxation Administration Act 1953 

     

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  • Regionalisation – a great option to expand a business.

    News Articles02/03/2020

    To survive and continually grow a business in today’s economic environment is always a challenge.  Businesses are constantly looking for different ways to do this and can often become overwhelmed with what to do or how to do it.

    As a professional service provider, if your client is considering expanding to a new area, be it a new region or even overseas, they will have to engage in “regionalisation” to make sure the business is best adapted to its new environment.

    Regionalisation is a simple concept, but one that can be very fruitful.  It involves taking the business’s competitive advantage and adapting it to reflect the particular environment and unique needs of the region/area that they wish to target for growth.

    Elements of regionalisation

    In adapting to a new business environment, there are two very different and important elements for businesses to consider and be aware of – legal and cultural.

    LEGAL:  New areas of operation will bring new laws and regulations to comply with. Depending on the industry, this can be a complicated or simple exercise.  Still, with proper advice and caution, this should be a manageable and predictable part of business expansion, unless you end up in a very rare Carlos Ghosn situation.

    CULTURAL:  Cultural regionalisation is not so manageable and has stopped several business expansions. Sometimes it does not matter how good you are at your job, you cannot succeed – the ongoing success of Irn Bru in Scotland is a good example. While Coke dominates the globe everywhere else where no trade embargo is in play, Irn Bru remains more popular within Scotland and this is unlikely to change.

    image of irn bru

    Similarly, the globally dominant Starbucks was not able to expand into Australia successfully. After initially expanding aggressively, the majority of stores in Australia closed, with the remaining stores serving areas with large numbers of tourists.

    Key points to consider when operating or advising a business that is considering expanding to a new region

    • Look at your current situation clearly and in context
      • Especially for franchise holders, the new expansion of the business should be viewed as an entity in itself, to be judged by itself. Success elsewhere will not stop you from losing money and if an overseas trend is not picked up in Australia, there is no reason to follow it here.
    • Have a clear idea of the advantages you do hold
      • Specialised products, brand recognition, intellectual property, established supply chains, financial resources, training methods, administrative resources – there is any number of reasons a business could be successful. But make sure these advantages apply to the area you are trading and are valued by your customers.
    • Expect your operations to change for the region you are in
      • Customer service standards, worker attitudes and business environment all vary depending on the region/area. Businesses should understand and adapt to these differences.
    • Success elsewhere does not mean success in your expansion
      • Your experience elsewhere is only as valuable as it is applicable to the situation you are currently in.
    • Expectations need to be aligned with the industry and region/area you are operating in
      • Benchmarks based on international norms may be poorly applied to a new region of operations, being either too lenient or strict.

    If you are having concerns about how well adapted a business will be, there are ways you can compare your business performance, not just to your overseas counterparts, but also to local businesses, which may be a better comparison.

    To find out more about this strategy, please contact Riad Tayeh on 02 9633 3333, mail@dvtgroup.com.au or complete our online contact form.

    dVT Group is a business advisory firm that specialise in business strategy, turnaround, forensic investigations and insolvency (both corporate and personal). 

    Thanks to Angus Fraser for his contribution to this article. 

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  • Solvency – the eternal challenge for directors! 

    News Articles

    Directors do not wake up one day and say “wouldn’t it be a good idea to wind up the company!”  It is either something that happens slowly and gradually (the “boiling frog” syndrome!) or something unexpected, like a devastating bushfire, that grabs them by surprise. 

    As well as managing the day-to-day business activities and finances, directors have a number of legal obligations.  They must also always act lawfully and honestly and make decisions for the benefit of the company and its shareholders.  A key component of these obligations is to ensure that the company does not trade while it is insolvent.

    What does this involve?

    • Directors should be very familiar with Sections 180 to 184 of the Corporations Act, which are all about good faith, care and diligence and acting in the interests of the company. Failure to do so recklessly or dishonestly can actually result in criminal penalties.
    • A director has an obligation to prevent insolvent trading (Section 588G) and can be made personally liable for incurring additional debt after the date the company becomes insolvent or is deemed to have become insolvent.  Again, if that insolvent trading is done dishonestly, the director can face criminal charges.  ASIC has recently been successful in prosecuting directors on criminal charges for insolvent trading, so they are serious about taking action.
    • A director can also be made personally liable by the ATO for failure to report and/or pay Superannuation, PAYG, GST, and other indirect taxes If a director has received a Director Penalty Notice from the ATO, they should immediately seek professional advice.

    The challenge of identifying if a company is trading solvent

    Whether the company has more assets than liabilities may be, and often is, irrelevant.  The definition of solvency is all about cash flow – can the company pay its debts as and when they fall due?  This is not always a simple question, particularly when you are looking at the complex business structures of major organisations.  Nevertheless, the indicators of insolvency are the same, regardless of the company size.

    It is crucial that directors are able to recognise the potential indicators of insolvency, such as:

    • Poor cash flow;
    • Overdue Commonwealth & State taxes;
    • Not paying superannuation liabilities;
    • Incomplete financial records or disorganised internal accounting procedures;
    • Not being able to invest in repairs or maintenance;
    • Increasing debts;
    • Push-back from banks and other lenders, perhaps requests to reduce borrowings etc.;
    • Suppliers changing supply terms to cash on delivery or demanding special payments before resuming supply;
    • Failure to pay within trading terms;
    • Special arrangements with selected creditors.

    Sometimes the indicators might be non-financial – increased warranty claims or disputes with customers or lowering staff morale (which often comes very early as a sign that all is not well with the business).  This latter indicator can result in production or sales problems, further increasing the risk of insolvency.

    What to do if the director feels the company is in trouble? 

    In the instance that a director feels the company is in trouble and may be trading insolvent, it can be a difficult and emotionally draining exercise to decide what to do and when to do it.

    Under the recently introduced legislation to combat illegal phoenixing, directors are now personally liable for a range of liabilities and may even face criminal charges if dishonesty is involved.

    It is crucial to get the right advice at the right time.  Failure to do this will have a potentially devastating impact on directors as well as employees, suppliers, customers and other stakeholders.

    What to do?

    If one or more of the above applies to your business or a business you know, and there are doubts about the company’s solvency, you should:

    1. Speak to your accountant – to help directors with financial issues, prepare budgets or a cash flow and understand what the future of their company looks like.
    2. Only incur debts that you are able to pay as and when they become due and payable.
    3. Seek professional advice from a specialist insolvency practitioner who can advise directors of their available options.dVT Group can help determine the solvency of a company and can also discuss different options.

    If you would like to know more and find out what options you might have, please contact Suelen McCallum at dVT Group on 02 9633 3333, or by email mail@dvtgroup.com.au

    dVT Group is a business advisory firm that specialises in business turnaround, insolvency (both corporate and personal), business valuations and business strategy support.  

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  • ASP Ventures P/L (In Liquidation)

    Creditor Reports17/01/2020

    We advise that on 17 October 2019, Riad Tayeh was appointed Liquidator of ASP Pty Ltd.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional advisor for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    To view the Report to Creditors dated 17 January 2020, click here……17.01.20 Report to Creditors

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.”

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  • With-You Pty Ltd (In Liquidation)

    Creditor Reports18/11/2019

    “We advise that on 4 November 2019, Riad Tayeh and David Solomons were appointed Joint and Several Liquidators of With-You Pty Ltd.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional advisor for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    To view the Initial Report to Creditors dated 18 November 2019, click here…  signed initial creditor report

    To view the Statutory Report to Creditors dated 4 February 2020, click here …   Statutory Report to Creditors 4.2.20

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.”

     

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  • Without the right business advice, the cost of wage and entitlement underpayment could lead to jail!

    News Articles

    Business owners need to ensure they get the right advice to ensure they are adhering to all the different awards in relation to employee wages and entitlements, as breaches of the Fair Work Act can be a criminal offence that can lead to severe fines or even imprisonment.  Ignorance is no defence! 

    The high profile 7-Eleven wage abuse scandal created widespread outrage in 2015-2016 after the household name and Australian franchise industry leader was found to have exploited vulnerable workers, resulting in new legislation and regulations to protect workers. And while the individuals found to be responsible did not go to jail, they have received a significant penalty with a fine of $350,000.

    While some breaches of the Fair Work Act are criminal offences, and individuals can be fined or even imprisoned if they break these laws, the majority of penalties in regard to the Fair Work Act are in the form of civil penalties.  Those penalties range from up to $12,600 for individuals and $63,000 for companies, for each contravention.  In the case of serious contraventions, those penalties could be as much as $126,000 for individuals and $630,000 for companies.  And that’s not just the employer – the Fair Work Ombudsman can also take action against people who were “involved in” the company’s contravention, and that may include company directors, HR managers, accountants or even a business involved in the supply chain (e.g. labour hire company).

    As such, it’s essential that business proprietors and even business managers and key HR personnel get the right business advice.

    In the case of 7-Eleven, many of the stores were found to have seriously underpaid their largely young, migrant workforce. This was done by either paying significantly less than legally required or, alternatively, by paying the legal minimum but demanding that staff “pay back” a component of their wages to the employer.

    This led to investigations that revealed that the franchisor (the 7-Eleven organisation) had effectively caused the situation because the franchising arrangements were such that it was impossible for the stores to make a profit unless they underpaid their staff.

    Migrant Workers Taskforce

    This high-profile case, as well as a number of others, then led to the Migrant Workers’ Taskforce being formed. The Taskforce headed up by former ACCC boss Allan Fels released its damning report earlier this year. As a result, the Federal Government accepted, in principle, all 22 recommendations from the report, which has advised unprecedented changes to Australia’s workplace law regime.

    Delivering a scathing verdict on the current rules, the taskforce recommended unprecedented changes to Australian workplace law, including tougher penalties, an expansion of Fair Work Ombudsman (FWO) powers and the establishment of a national registration scheme for labour-hire firms.

    As a result of widespread media coverage of this high-profile case, we’ve had a number of clients who have used our business advisory services to seek help with their own complicated wage obligations, or even just get an independent opinion on whether they have calculated wages correctly.

    Seek business advice as ignorance is no defence

    From our experience, the most commonly affected are medium-sized businesses rather than large or small. That’s because large organisations have professional inhouse resources to provide advice. But it’s the medium-sized businesses that don’t have access to regular advice that are most likely to break the law, usually in ignorance rather than deliberately. They also have lots of employees with lots of different awards applying to their wages and other entitlements.

    However, ignorance is no defence for underpaying staff entitlements. And while it’s not usually the role of an accountant or business advisor to pick up on when something’s going wrong in a client’s business, they are in a unique position to provide advice. As an advisor, you should see red flags like arrears in tax and other payments, payment demand notices, and non-financial signs such as high staff turnover or a lack of maintenance being undertaken.

    Complicated award structures

    One of the main reasons that business owners are inadvertently underpaying staff entitlements is the level of complication in Award structures. Within any given industry there can be many Awards governing workers’ entitlements, and these will vary greatly.

    If, for example, a company employs people who work different shifts, that might involve different rates or entitlements depending on the day of the week they work or time of day. It becomes messy when they swap shifts with others, take leave, or other perfectly acceptable changes, and it’s really easy to make payroll mistakes.

    And award structures are not a static situation because unions are continually negotiating new allowances for members and awards are constantly altered. Sometimes the entitlements are quite ridiculous. During the building of Darling Harbour in the late 1990s, workers received a ‘Chinese Food Allowance’, that was negotiated by their union because they could constantly smell Chinese food in Chinatown adjacent to the building site.

    Compare that to a recent matter in which a Brisbane café was alleged to have breached workplace laws by paying its staff (primarily visa holders and workers under the age of 21) with food and drink, instead of lawful entitlements such as overtime and penalty rates.

    And what about the long-term consequences of the recent decision of the NSW Compensation Commission who in the past few days found that a contestant was legally an employee of Channel Seven when she appeared on the reality show House Rules in 2017, and was therefore entitled to claim compensation for psychological trauma in relation to her claims for harassment and bullying?

    Workplace laws keep evolving and it is a challenge for employers to keep up to date with changes.

     Not just back wages

    We are currently working with a client who could owe up to $1 million in wages, entitlements and payments. This goes back seven years and there are plenty of other businesses who have similar issues – many of whom may not even be aware that they have an issue yet.
    In these cases, it’s not just unpaid wages, it’s also payroll tax, workers compensation, group tax and superannuation. The ATO imposes penalties as well as charging interest so the bill can grow and grow. It’s also hard to track down former employees, particularly if there’s a high number of short-term or part-time workers involved.

    It’s never too late to seek external business advice to help avoid the pitfalls that all business owners can face.

    Please contact Suelen McCallum on 02 9633 3333, email mail@dvtgroup.com.au or complete our online contact form to find out more about how we can help you or your client with the evolving workplace laws. 

     dVT Group is a business advisory firm that specialise in business turnaround, insolvency (both corporate and personal), forensic services and business strategy support.  

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  • Employment Law – changes to calculation of personal leave.

    News Articles

    A recent Federal Court decision regarding employment law will affect all businesses in Australia, with wide-ranging implications for employers who do not abide.  This is essentially due to a change in what was considered a “standard working day!”

    On 21 August 2019, in Mondelez v AMWU & Ors [2019] FCAFC 138, the Full Federal Court of Australia confirmed that all employees (including part-time employees) are entitled to the 10 “working days” of personal/carer’s leave per year prescribed in s96(1) of the Fair Work Act 2009, regardless of how many hours the employees work per day or how many days are worked per week.  The Full Court has clarified how the word “day” is to be interpreted and how this will impact all employees.

    Pending any appeal to the High Court (if leave is granted) the Full Federal Court’s decision reflects the current state of the law.  Full-time and part-time employees are entitled to 10 working days of paid personal/carer’s leave for each year of employment.  Personal leave is not accrued in hours but days!  A working day is the portion of a 24-hour period that an employee would otherwise be working.

    So what was the case about?

    Section 96 of the Fair Work Act entitles employees to 10 days personal/carer’s leave per year, which accrues by reference to ordinary hours of work.  Mondelez employees worked 36 ordinary hours per week – some worked 7.2 hours per day for 5 days per week, and some worked 12 hours per day for 3 days per week.  Mondelez argued that its shift workers who worked 3 x 12-hour days per week, or 36 ordinary hours per week, should accrue 72 hours personal leave per year, being 10 days at 7.2 ordinary hours, which they argued reflected the standard numbers of hours for a day of leave.  The union argued that the shift workers should be entitled to 10 days of personal/carer’s leave at 12 hours per day.  The Full Court, by a majority, did not agree with Mondelez and held that all employees are entitled to 10 working days personal/carer’s leave per year, regardless of how many hours are worked in a particular day.

    Under this approach, the shift workers were found to be entitled to 10 x 12 hours of personal/carer’s leave per year, or 120 hours in total.  On that basis the other employees (those working 7.2 hours per day for 5 days) would only be entitled to 72 hours of personal/carer’s leave per year.  The decision also confirms that part-time employees (regardless of the number of days worked each week) are also entitled to 10 full working days of personal/carer’s leave per year.

    The Court also found that a working day is not a calendar day.  Rather it is the working hours that the employee is scheduled to work in the 24-hour period commencing from the time an employee starts work on a particular day.

    It would seem, therefore, that a “standard” day is no longer a defined period of hours but depends on the nature of the employment.

    The decision will have wide-ranging implications for employers, the overwhelming majority of whom do not presently accrue or account for personal/carer’s leave in this manner.  In particular, most payroll systems accrue personal/carer’s leave on an hourly basis and/or pro rata based on days worked.  In other words, payroll systems tend to accrue 76 hours of personal/carer’s leave per year for full-time employees, and a pro-rata amount for part-time employees.  If you or your client has such a payroll system, and your employees work anything other than a 7.6 hour day, 5 days a week, you may need to review how you are accruing and paying for personal/carer’s leave, i.e. ensure that they calculate leave under s96(1) for each employee based on the employee’s particular “working day”, that is the “portion of a 24-hour period that would otherwise be allotted to work”.

    It is also important to stress that the 10 days of personal/carer’s leave is there, regardless of whether your employees are part-time or full-time.  In other words, an employee working 2 days per week is entitled to 10 days of personal/carer’s leave per annum, and an employee working 5 days per week is also entitled to 10 days of personal/carer’s leave per annum.  So that part-time employee effectively has 5 weeks of personal/carer’s leave per year, compared to 2 weeks for the full-time employee.  Potentially, that has material cost implications for the employer.

    Failure to accrue and pay in accordance with the current law will have financial and legal implications so check your payroll systems and speak with your employment law advisors for more information.  You can also check with Fair Work Australia for more information on your obligations.

    Please contact Suelen McCallum on 02 9633 3333, email mail@dvtgroup.com.au or complete our online contact form to find out more about how we can help you or your client. 

     dVT Group is a business advisory firm that specialise in business turnaround, insolvency (both corporate and personal), forensic services and business strategy support.  

     

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  • Flor Australia Pty Ltd (In Liquidation)

    Creditor Reports15/11/2019

    I advise that on 11 November 2019, Suelen McCallum was appointed Liquidator of Flor Australia Pty Ltd.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional advisor for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    To view the Report to Creditors dated 15 November 2019, click here… 15.11.2019 – Creditor Report

    To view the Statutory Report to Creditors dated 10 February 2020, click here…   Statutory Report to Creditors dated 10 February 2020

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au

     

     

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  • CBB Group Pty Ltd (In Liquidation)

    Creditor Reports08/11/2019

    We advise that on 19 August 2019, Riad Tayeh was appointed Liquidator of CBB Group Pty Ltd.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional advisor for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    To view the Report to Creditors dated 7 November 2019, click here… Statutory Report to Creditors – 7.11.2019

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.”

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  • ASP Ventures Pty Ltd (In Liquidation) trading as CoCo Cubano Rouse Hill

    Creditor Reports23/10/2019

    We advise that on 17 October 2019, Riad Tayeh was appointed Liquidator of ASP Ventures Pty Ltd.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional advisor for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidator in his investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    To view the Liquidator’s Initial Report to Creditors dated 23 October 2019, click here …  initial creditor report

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  • How strata housing levies can lead to bankruptcy!

    News Articles14/10/2019

    For many of us, ownership of a residential strata apartment is a successful way of fulfilling the need for a private dwelling, but it comes with the shared responsibility for maintenance and upkeep with other owners.

    As we are now seeing in many cases, the situation can become difficult when strata unit owners are being faced with massive costs of rectification of underlying defects in their building, resulting in high special levies for remediation works being imposed by body corporate committees on owners.

    For some owners, the amount of these levies can be beyond their immediate capacity to pay.  Owners are also faced with the difficulty of selling their strata apartment and even borrowing further monies towards the apartment becomes limited or impossible because of the defects.

    Anyone owning or buying a strata unit should be aware that the strata owners corporation has a responsibility under the NSW Strata Schemes Management Act 2015 to both set levies for maintenance of the block, and to set special levies for particular maintenance needs, and to recover those levies through the legal process. While the owners corporation may come to an agreement with an owner in financial hardship, generally the owner must acknowledge the amount owing and offer reasonable payment terms.

    Bankruptcy and building defects

    There are now a number of court decisions in Australia involving the bankruptcy of a strata unit owner, but we are yet to see how the more recent issues of building defects will play out.

    A recent case in New Zealand gives some indication.  It involved an owner going bankrupt because of the cost of building defects.

    Her residential block was found to require significant remedial works including the replacement of decayed timber walls, roofs and floors. The estimated cost of the works was in the order of NZ$13 million. A settlement was reached with the builder, but this was not enough to cover the full costs of remediation. Special levies were imposed by the body corporate committee on all owners.  One owner not only refused to pay these special levies, but she also unsuccessfully sued the body corporate committee over its right to impose the levy. This ultimately led to bankruptcy proceedings being taken against her by the body corporate. By that time, her debt had risen to over NZ$200,000.

    dVT Group have managed several cases where the main reason property owners became bankrupt was due to their failure to pay strata levies for their strata property. We administered these bankrupt estates in a cost-effective way and having vast experience in the sale of real property, we managed to sell the properties quickly and achieve excellent sale prices.  This allowed for outstanding levies to be paid along with other debts owing by the individual owner.  In some cases, the bankrupt was annulled and a surplus was achieved after sale of the property.

    In another matter where we were appointed trustee, the unit owner unsuccessfully challenged the bankruptcy order, indicating the firm position the courts can take on these matters.

    An alternative to bankruptcy

    Bankruptcy is generally not the preferred way to proceed in these instances, particularly not for an owner who is otherwise meeting their financial commitments, and even for the strata committee who would see it as a last resort.  If a non-bankruptcy settlement can be achieved by agreeing on a compromise on the amount owed and/or a period of repayments agreed, then all parties usually benefit from a better outcome than if going down the bankruptcy path.

    We say this as experienced trustees in bankruptcy who are required to administer these bankruptcies.  The aim is to avoid owners being forced to give up their home and to avoid accumulated costs and government charges eating away whatever equity value the owner has in their unit.  That equity can also be limited or non-existent in times of falling property prices; if a trustee is ultimately obliged to sell the unit, the law does not require the trustee to wait on any housing price recovery.  This can result in the strata committee being in a situation where the money collected from the sale of the property is not enough to cover the money owed as well as its own accumulated costs.  That is often not the end of the bankrupt owner’s litigation, with the trustee then being the subject of challenges to his or her authority under the law, adding to the costs and time.

    With the potential for the recent building defects cases in NSW leading to bankruptcy proceedings, there are also calls for government assistance, claims on insurance, and talk of class actions in response.

    Is bankruptcy the right option? 

    With our experience in financial claims and bankruptcy, we can give advice on what the consequences of bankruptcy would be.  We take into consideration the amount involved, the value of the property, the value of other creditors’ claims, and in particular secured claims by banks or other lenders and of course the capacity of the owner to maintain mortgage repayments.

    There are some instances where bankruptcy cannot be avoided, and in some cases, it can be what is needed to help resolve a person’s overall financial predicament.  In any situation, the key to getting the best outcomes possible is to ensure that the bankrupt owner has early discussions with the trustee and that they co-operate in the necessary requirements of bankruptcy law.

    At dVT Group we can help you or your client by evaluating the individual situation of being a strata housing owner and by discussing the options available. We would commence with a review and possible restructure of the owner’s financial commitments with a view to resolving their difficulties outside bankruptcy; or, if the situation warrants it, by way of recommending bankruptcy or other personal insolvency option.

    Please contact Mark Robinson on 02 9633 3333, email mail@dvtgroup.com.au or complete our online contact form to find out more about how we can help you or your client.  

    dVT Group is a business advisory firm that specialise in business turnaround, insolvency (both corporate and personal), forensic services and business strategy support.  

     

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  • What happens to superannuation in the event of bankruptcy?

    News Articles

    In the challenging event of bankruptcy, your super funds could be off-limits to creditors and may even be used to fund asset purchases. The Bankruptcy Act states that, if a person becomes bankrupt, funds held in a person’s regulated super fund are protected and unavailable to creditors.

    In addition, a bankrupt person can withdraw money from their super funds, subject to superannuation regulations, and spend these amounts as they wish. If they acquire an asset such as a house and the major portion of the acquisition cost comes from their super funds, the house is also protected from creditors.

    However, there is one major caveat

    If a person, prior to becoming bankrupt, makes large, ‘out of character’ contributions to their super funds with money that could be paid to creditors, these payments could be taken back. In certain circumstances, the Bankruptcy Act empowers the trustee to claw back such payments into the bankrupt estate.

    The importance of timing

    The key point is this:  the protection afforded by the Bankruptcy Act to funds held in super funds only commences when the person becomes bankrupt.

    Consider this example:  an individual, prior to declaring bankruptcy, withdraws money from a super fund and purchases an asset. These funds are not protected and can be taken by the trustee for the benefit of creditors.

     A curious case

    In discussing this issue, let’s examine a recent case from the Australian Financial Security Authority (AFSA) which has some intriguing facts. The case deals with Ms Kim Britton, aged 60, from Queensland.

    According to the AFSA report, here are the facts of the case:

    • On 12 March 2014, Ms Britton was served a Bankruptcy Notice relating to an unpaid Family Court judgment of $45,000
    • On 17 March 2014, Ms Britton requested her two superannuation providers to withdraw amounts from her funds.
    • On 20 March 2014 and 27 March 2014 Ms Britton duly received $25,401.96 and $33,399.06 which she deposited into her bank accounts
    • On 21 March 2014 and 28 March 2014, Ms Britton made eight cash withdrawals totalling $58,000
    • On 20 April 2014, Ms Britton became bankrupt on her own petition. She subsequently informed the trustee of her bankrupt estate she had spent the $58,000 on living expenses.

    Ms Britton was convicted on two counts of removing property prior to bankruptcy and sentenced to six months imprisonment. However, she was released immediately on a $3,000 good behaviour bond for three years. In passing sentence, the Magistrate took into account the seriousness of the offence and noted the need for deterrence.

    In exploring the facts of the case, it seems that, had Ms Britton left the moneys in her two super funds until she became bankrupt, she could have escaped prosecution. This is because the funds would have been protected by the provisions of the Bankruptcy Act. So, once she had become bankrupt, she could have withdrawn the funds and spent them without the threat of punishment.

    Given that creditors were not disadvantaged, it is curious why AFSA felt the need to take action against Ms Britton.

    We also note the nature of the debt on which the bankruptcy notice was based, related to Family Law Act proceedings possibly involving her former spouse/partner. Ms Britton may have been fearful that she would lose the moneys in her super funds when she became bankrupt and that her former spouse/partner, acting as a creditor, would receive some of these funds. To avoid this event, she withdrew and spent the funds in the three weeks prior to becoming bankrupt.

    From our perspective, it seems that when contemplating bankruptcy, Ms Britton either did not seek professional advice concerning the status of her super funds or she received advice from someone who had little or no understanding of the interaction between super and bankruptcy.

    Getting help when bankruptcy looms

    This somewhat sad tale demonstrates the need to obtain quality professional advice in the event of someone facing or contemplating bankruptcy. dVT Group’s Personal Insolvency team has extensive experience and knowledge on all the facets of the Bankruptcy Act and the potential impact of bankruptcy on a debtor and their creditors.

    They can assist creditors and/or their legal representatives who are considering whether or not to take bankruptcy action against a debtor. dVT Group can also help ascertain the steps and costs involved in the process in making the debtor bankrupt and what happens after the debtor is made bankrupt and a trustee is appointed to administer their bankrupt estate.

    Special thanks to Bob Cruickshanks for his technical expertise and valuable perspective on this subject.   

    If you would like to know further in relation to a specific situation, please contact David Solomons on 02 9633 3333, email mail@dvtgroup.com.au or complete our online contact form to find out more about how we can help you.

     dVT Group is a business advisory firm that specialise in business turnaround, insolvency (both corporate and personal), forensic services and business strategy support.  

     

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  • ART Labour Hire Pty Ltd (In Liquidation)

    Creditor Reports11/09/2019

    We advise that on 11 June 2019, Riad Tayeh and Suelen McCallum were appointed Joint and Several Liquidators of ART Labour Hire Pty Ltd.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional advisor for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidators in their investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    To view the Liquidators’ Second Report to Creditors dated 11th September 2019, click here …  Second report to creditors

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  • Anderson Recruitment and Training Pty Ltd (In Liquidation)

    Creditor Reports

    We advise that on 11 June 2019, Riad Tayeh and Suelen McCallum were appointed Joint and Several Liquidators of Anderson Recruitment and Training Pty Ltd.

    By proceeding to view information about the Company, you are declaring that you are a creditor or professional advisor for this matter, and that you agree not to communicate any information to any person other than another creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidators in their investigations into the affairs of the company, please do not hesitate to contact this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    To view the Liquidators’ Second Report to Creditors dated 11th September 2019, click here … Liquidators’ Second Report to Creditors

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  • How 2nds World become Harvey Norman 2nds World?

    News Articles09/09/2019

    History

    The 2nds world brand has been a well-known, long standing brand for over 20 years.  It started with a 200sqm store in Cremorne and became the largest provider of seconds whitegoods in Sydney.  It will always be remembered with affection and fond memories playing an important role in providing a great low-cost solution to furnish homes for new homemakers.

    It was unfortunate that after struggling with significant unprofitable trading, failed expansion into Melbourne, inadequate working capital to sustain the required inventory levels, inaccurate record keeping and poor management decisions that the Company found themselves in deep distress.

    In April this year, the Company came to us (dVT Group) in a very difficult financial position.   An analysis of their situation revealed that:

    • There were no assets to speak of as even the shop premises were leasehold
    • All stock was subject to secured interests – pledged to somebody else with GSA (General Security Agreements) on all assets
    • There were monthly obligations of $220k for rent and $400k for wages etc
    • The fixtures, fittings etc. were fixed & considered part of the premises, benefiting the landlord
    • There was negligible money in the bank

    On 15th April 2019, dVT Group were appointed as Administrators of the company.  The above position meant that we did not have much immediate value to deal with, and it became evident that it would be very difficult to continue to trade on.  To add to this, as Administrators we became personally liable for all authorised liabilities going forward.

    Overcoming the challenges:   

    After spending time to obtain a complete picture, our team assessed all possible options and came up with a strategy that involved:

    1. Expression of Interest: Within 3 days, we had placed an advertisement in Australian Finance Review looking for expressions of interest to purchase 2nds World;
    2. Obtaining Court Orders: we prepared and lodged an application to the Court to obtain “declaratory orders” to extend the Administrator’s rent-free period.
    3. Overcoming the stock war: These Orders also provided relief by giving us the right to sell the stock, notwithstanding the multiple pledges.  This allowed us to use the proceeds to pay for legal fees, valuation costs, insurance etc., with any residual funds going to suppliers who had secured interests in the stock.
    4. Assisting the Employees: With the view of aiming to get the best outcome for all stakeholders, we allocated a team to assist employees with the process of getting their employee entitlements.

    What contributed to being successful:

    We were very proud of how our team came together and approached the challenges with a determination to succeed, despite the difficult starting position.  We felt that these factors contributed to achieving a great outcome:

    1. Speed: we moved quickly to understand the position and issues and came up with a plan to avoid multiple claims over the stock by creditors.  This proved that Administrators can deal with secured assets if you are able to get the appropriate direction from the Courts.
    2. Working relationship with the Court: our collaborative approach paid off as the Court was willing to work with us, as a trusted practitioner.  We worked together to get an understanding of the situation and come up with an effective solution.  This was achieved within 5 days from being appointed as Administrators.
    3. Engaging all stakeholders: another factor that helped work through this difficult situation was that we involved and invited the affected parties (including the landlords and secured stock suppliers) to come along and engage in face to face meetings.  We had a lawyer come along to Court representing a number of creditors.
    4. Dealing with the landlords: Our above actions also overcame the possible situation of the landlords locking us out of the premises and claiming a lien to the stock on the premises.  The landlords could have taken this action as compensation for the rent that had not been paid!   Our quick actions also helped the landlords by freeing up their premises, allowing new rental agreements to be secured.
    5. Being proactive: while working through the above immediate concerns and challenges, we also had a separate team assisting the employees, by starting the process of completing FEG documentation.  This was done while the company was still in limited trading, and in the likely event that the company was going from a VA (Voluntary Administration) into Liquidation.

    The result: 

    In summary, we saved the 2nds World brand and achieved a great result for all stakeholders by moving quickly to understand the issues and overcome challenges, being proactive and devising a plan that was legally innovative and that considered all parties involved.

    Negotiations were fast and successful and after an extensive marketing campaign, we were able to consummate the sale with Harvey Norman to carry on this iconic brand.  It was a great fit as it complements Harvey Norman’s existing brand and positioning.

    As well as helping employees with obtaining their entitlements, we were also able to secure employment for some of the employees on a casual basis and others were employed by Harvey Norman on a full-time basis.

    The dVT Group are continuing with investigations and action to ensure possible settlements, preferences and unfair loans are dealt with on behalf of all stakeholders and creditors as part of the liquidation.

    Lessons to share:

    We share some of the lessons or points that may help either yourself, or someone you know in a similar position:

    1. Don’t delay, get help as soon as you can, it is important to move quickly!
    2. Ensure you engage a professional who has the technical and strategic skills to devise an effective and successful strategy, ideally engaging professionals who understand the dynamics of retail and all its elements
    3. Carefully review all security documentation including Purchase Money Security Interest (PMSI), ensuring that they are lodged correctly, that there are no mistakes or omissions and that it is  valid.  dVT Group can help review and amend PMSI documentation to avoid issues down the track.

    In summary, there are always warning signs of a business struggling.  If you are a business owner or a professional that deals with business owners, be aware of these signs and seek professional advice as early as possible to benefit from more options to overcome challenges and achieve the best result possible.    

    Should you or one of your clients need similar help or would just like to chat to us, please call Mark Robinson or one of our partners on 02 9633 3333, email mail@dvtgroup.com.au or complete our online contact form to find out more about how we can help you.

    dVT Group is a business advisory firm that specialises in business turnaround, insolvency (both corporate and personal), forensic services and business strategy support.

     

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  • Advisory Boards are often the secret behind successful and thriving businesses!

    News Articles05/09/2019

    More businesses should be discovering the benefits of using Advisory Boards!  If you own or know of a business that is experiencing, or has the potential for high growth, one of the most worthwhile things you should do is look at starting an advisory board.  Growing a business is challenging work, so find out how you can benefit from drawing on valuable and practical experience, perspectives and knowledge that enhance your own. 

    An advisory board consists of a group of advisers that are strongly dedicated to the success of the business.  They can not only provide a platform to test and develop your ideas but can potentially open doors to access important resources and capabilities.

    An article from the Harvard Business Review, ‘Who advises the Entrepreneur?’ (22/10/13), outlines that many owners, especially those in the primary stages of their business,  find the task of building an advisory board intimidating. The article also identified questions that may be raised by owners around whose strengths would complement their own and whose would counteract their weaknesses or perhaps bring insight that they may have otherwise missed. Additionally, most people who have not had direct experience with the operations of an advisory board haven’t given much thought to the potential benefit it could bring to the business.

    An advisory board is a selected group of individuals that have the knowledge and skills a business owner lacks, and they provide their time to assist, guide, challenge and provide perspectives on new opportunities. The advice they provide is non-binding to the organization, as the board holds no legal or financial responsibility for the decisions a business owner makes.  This makes it rather informal in nature and provides owners and managers with a ‘safe’ space to discuss issues of major significance.

    The benefits of having an Advisory Board: 

    • Utilises the knowledge and skills of advisers who possess the understanding and experience in growing and developing a business.
    • Acts as a platform to take the heat when others may not agree with the decisions of owners/management.
    • Can improve the credibility of a business in the marketplace.
    • Provides diversity of opinions. A good advisory board will comprise of different personalities, talents and expertise which lead to differences in opinions from different points of view.
    • Helps garner information to manage risks.
    • Helps to manage and control disputes and disagreements between family members that work together in a family business.

    When would a small or medium business benefit from an Advisory board?

    • A company is undergoing a stage of rapid growth.
    • A company needs to raise necessary funds.
    • A company is facing major decisions and/or changes in direction, such as entering into new markets, introducing new products/services or expanding operations.
    • A company is experiencing specific functional and/or structural issues.
    • A company wants to build strategic business partnerships.
    • A company lacks a strong internal leadership team.

    Setting up an advisory board will provide you with the necessary provisions needed to prosper.  It will also allow you, as a business owner, to access others specialised knowledge, while enhancing your own knowledge and abilities. A strong advisory board can be essential in allowing you to take your business and expanding it to the next level.  At dVT Group we have successfully set up such Boards for our clients in the past and are happy to discuss with you your individual situation and needs.

    Should you or one of your clients wish to talk to us about the benefits of an Advisory Board, please contact us on 02 9633 3333, email mail@dvtgroup.com.au or complete our online contact form to find out more about how we can help you.

    dVT Group is a business advisory firm that specialise in business strategy, turnaround, forensic investigations and insolvency (both corporate and personal). 

     

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  • How to distinguish good growth from bad growth in business

    News Articles

    While it may seem like a fairly obvious distinction, even the best accountants and business advisors can miss the signs of a company that is experiencing ‘bad growth’.

    So, what is considered bad growth? It is often characterised by:

    • growing unnecessary debt;
    • expanding the wrong kind of behaviours; and
    • allowing innocuous issues to develop into crises.

    It is also often accompanied by fast growth, where potentially great companies grow so rapidly that they don’t have time to form sustainable ways of operating for the future.

    ‘Good growth’, on the other hand, is about:

    • growing a healthy business;
    • expanding capacity; and
    • advancing people skills.

    Unsurprisingly, good growth often occurs at a much steadier and more manageable pace.

    Red flags for bad growth

    As a business advisor to a growing organisation, the sorts of red flags you should be on the lookout for are, but not limited, to:

    • Poor management: Growth can mean a company becomes too large for the founder/manager to be across every aspect of the business, which challenges both the management capabilities and the culture of an organisation. As a result, the business can lose its competitive advantage or the unique value proposition that allowed the business to grow in the first place.
    • Financial viability: An increase in sales does not always equal an increase in profit and or cash available to the business. For example, the increase in turnover may be achieved by taking on a larger client, but in order to secure this larger client, margins are reduced, and payment terms are extended. This action, while increasing turnover, can deplete working capital.Increased sales can also mean increased cash outflow, however, if there is also a reduced GP margin and longer terms are given, it also means a slowdown in cash inflows.  Further net profit might also be negatively impacted.  For example, take a company that acquires a business with a gross profit margin less than the marginal overhead costs and financing costs.  We had a labour hire business doing just that.  The more business they put on, the more losses they made.  This was principally because of its financing costs.  Once we paired back this aggressive growth to more organic growth, profitability and cash flow was restored.
    • Hiring & firing: Hiring the wrong people to fill positions quickly and thereby fostering a negative or otherwise undesirable company culture can have dire consequences and lead to employee turnover due to communication breakdowns.
    • Customer service & quality: Reduced quality of customer service, often due to loss of personalisation and management confusion. Plus, a danger of reduced quality of goods as focus shifts from quality to quantity.

    How can you foster good growth?

    At dVT Group, we work with our clients to manage the pace of growth to help with two key areas – strategic planning and forecasting. It is the development of a strategic plan, which includes sales and marketing, as well as having and practising good quality forecasting that provides true visibility over your business cash flow.

    Strategic Plan

    A strategic plan outlines the best way for the business to deliver growth. It determines the who, how, when, and what actions are required to deliver the growth. The plan also provides the mechanisms to track and monitor the growth, and provide levels of accountability for those responsible for delivering the growth. As well as sales and marketing requirements, an effective strategic plan also considers the business operations, HR and finance needed to achieve the growth, and to then effectively manage the growth.

    Forecasting

    Strategic plans need to be accompanied by forecasts that consider the current business model. They must include the current operational and management capacity and then incorporate both the CapEx and OpEx costs required to deliver the growth plans.

    The aim of both the strategic plan and forecasting is that there will be no major surprises. Forecasting provides true clarity around how growth will impact your GP and NP margins and allow the business to plan accordingly.

    If, for example, the business has visibility on the cash requirements, it can plan for the additional debt or equity required to fund the growth at the right times. If that additional cash needs to come from debt, the likelihood a lender will provide additional working capital facilities (at reasonable rates) is greatly increased if the business has good visibility and plans are in place to manage the growth. The strategic plan and the forecasting become tools that enable the lenders to provide the required funding.

    Great visibility is key

    Having visibility also means a business can make the hard but ultimately wise decision on when not to grow. This should be the case when additional resources such as cash or management skills are not readily available. This hard decision, can in certain circumstances, ultimately save a business from failure and protect the existing business.

    Growth is not easy to achieve and is not always a remedy for all business problems. For a business owner to achieve it, they need to make certain investments upfront and be prepared to make changes in the business. The first investment should be into the creation of a solid strategic plan and the subsequent preparation of detailed forecasting.

    Should you or one of your clients wish to talk to us about how to distinguish good growth from bad growth, contact Riad Tayeh on 02 9633 3333, email mail@dvtgroup.com.au or complete our online contact form to find out more about how we can help you.

    dVT Group is a business advisory firm that specialise in business turnaround, insolvency (both corporate and personal), forensic services and business strategy support.

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  • Employment Law – Changes to calculation of personal leave

    News Articles02/09/2019

    All business owners and advisers should be aware of a recent decision in regard to employment law, which will affect every business in Australia.

    On 21 August 2019, in Mondelez v AMWU & Ors [2019] FCAFC 138, the Full Federal Court of Australia confirmed that all employees (including part-time employees) are entitled to 10 “working days” of personal/carer’s leave per year under the Fair Work Act, regardless of how many hours the employees work per day or how many days are worked per week.

    Pending any appeal to the High Court (if leave is granted) the Full Federal Court’s decision reflects the current state of the law.  Full-time and part-time employees are entitled to 10 working days of paid personal/carer’s leave for each year of employment.  Personal leave is not accrued in hours but days!  A working day is the portion of a 24-hour period that an employee would otherwise be working.

    So what was the case about?

    Section 96 of the Fair Work Act entitles employees to 10 days personal/carer’s leave per year, which accrues by reference to ordinary hours of work.  Mondelez argued that its shift workers who worked 3 x 12-hour days per week, or 36 ordinary hours per week, should accrue 76 hours personal leave per year, being 10 days at 7.6 ordinary hours, which they argued reflected the industrially accepted standard numbers of hours for a day of leave.  The Full Court, by a majority, did not agree and held that all employees are entitled to 10 working days personal/carer’s leave per year, regardless of how many hours are worked in a particular day.

    Under this approach, the shift workers were found to be entitled to 10 x 12 hours of personal/carer’s leave per year, or 120 hours in total.  The decision also confirms that part-time employees (regardless of the number of days worked each week) are also entitled to 10 full working days of personal/carer’s leave per year.

    The Court also found that a working day is not a calendar day.  Rather it is the working hours that the employee is scheduled to work in the 24-hour period commencing from the time an employee starts work on a particular day.

    It would seem, therefore, that the “standard” 7.6 hour day is no longer standard!

    The decision will have wide-ranging implications for employers, the overwhelming majority of whom do not presently accrue or account for personal/carer’s leave in this manner.  In particular, most payroll systems accrue personal/carer’s leave on an hourly basis and/or pro rata based on days worked.  In other words, payroll systems tend to accrue 76 hours of personal/carer’s leave per year for full-time employees, and a pro-rata amount for part-time employees.  If you or your client has such a payroll system, and your employees work anything other than a 7.6 hour day, 5 days a week, you may need to review how you are accruing and paying for personal/carer’s leave.  Failure to accrue and pay in accordance with the current law will have financial and legal implications.

    Check your payroll systems and speak with your employment law advisors for more information.  You can also check with Fair Work Australia for more information on your obligations.

    Should you wish to talk to us about this, please call Suelen McCallum on 02 9633 3333 or email mail@dvtgroup.com.au

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  • The need for Insolvency Practitioners to act quickly in Administrations to minimise delays!

    News Articles09/07/2019

    In the complex task of finalising insolvencies, Insolvency Practitioners try to expedite the process without sacrificing thoroughness. Although certain delays are inevitable, particularly in receiving Court decisions, Insolvency Practitioners (IPs) can save time, and costs, by making use of Court provisions designed to limit their duration. 

    Quick takeaway

    It is in the interests of all creditors and other stakeholders that the administration of an insolvent company or individual be conducted efficiently, effectively and expeditiously. However, one significant delay can be in obtaining judgement from the Courts regarding recovery and offence actions taken by Insolvency Practitioners.  In the case of any real delay in receiving the Court’s decision, IPs should seriously consider instructing their lawyers to make inquiries of the Court, as provided for by the Court’s Guidelines, rather than allow the administration to remain in abeyance.

    Background

    Whether it be a bankruptcy trustee contacting banks to secure funds in the bankrupt’s accounts, or a company liquidator going to the company premises to secure the plant and equipment, insolvency practitioners must move quickly when they are appointed.

    After completing initial tasks, they must then take further prompt action to contact the bankrupt or the directors, notify creditors of the insolvency, and commence investigations.

    The need to resolve any insolvency promptly has to be balanced against the need to conduct investigations, resolve creditor claims, sell assets and pay any dividend.  The law imposes time limits throughout the process to ensure the administration progresses promptly.

    Creditors and their advisers, and other parties affected by an insolvency, should be aware that delays can occur with the Courts. Courts are obviously an essential feature of our insolvency regime, and IPs, as officers of the Court, play an important part.  Justice and the rule of law provide the authority for practitioners in their challenges of voidable transactions and payments involving third parties.  Inevitably, time is required to ensure that due process and fairness prevail, including any right to appeal.

    It is important to point out, for the sake of transparency and fairness to IPs, those situations where delays can arise in the insolvency process.

    Some examples are:

    • Filing examinations summonses and obtaining hearing dates for public examinations
    • Obtaining any Court directions or approvals required by the law
    • Commencing recovery proceedings and going through the process of obtaining a hearing date, and having the matter heard, often with adjournments and directions involved
    • Responding to, or making, an appeal
    • Enforcing the orders, often through further Court process

    During this time, IPs must: report to creditors; deal with creditor inquiries and claims; convene and hold meetings of creditors; realise assets, including the business itself; verify secured claims; and attend to regulatory requirements. Any of these tasks can, by their nature, involve challenges to the IP’s decision, to which the IP must respond.

    There can be significant delay in the delivery of the Court’s judgment. While acknowledging the important and often complex tasks of a judge in making a decision, and giving reasons for it, the handing down of a decision can be delayed for many months. This affects not only the defendants to any claim by the IP, but also the finalisation of the insolvency administration, which might need to be put on hold pending the Court decision.  Costs can accrue unnecessarily – by way of the need for further reporting and attending to creditor inquiries, and the imposition of ongoing government charges under the ASIC funding levy.

    Pending decisions from higher-level Courts on appeal, relating to important matters of insolvency practice, can also result in delays in lower Courts’ decisions.

    Courts require that parties and their lawyers aim to have their matter dealt with “as quickly, inexpensively and efficiently as possible”; this includes considering the option of settling a claim or dispute.  IPs need to factor in the costs and time involved in Court proceedings, even in the case of a clear recovery right, as do creditors when they make any decision based on the IP’s recommendations. The decision to litigate and how that litigation is conducted can also be important factors when a Court later assesses the proportionality of the IP’s remuneration.

    Conclusion

    Inevitably, Court proceedings will be required and despite the time involved, they serve an important purpose in the administration. Most Courts have published guidelines that state a period within which parties should expect their judgment to be delivered – say within 3 months. This is supported by a process of inquiry to the Court, which is available to the parties if the delay extends beyond the stated period. If there is any real delay in receiving the Court’s decision, IPs should consider instructing their lawyers to inquire, as appropriate, rather than to allow the administration to remain in abeyance.

    dVT Group knows the importance and has the experience of handling the Administration of an insolvent company or individual in an efficient and expeditious manner.  Should you wish to talk to us, please call Antony Resnick on 02 9633 3333 or email mail@dvtgroup.com.au – or complete our online contact form to find out more about how we can help. 

     

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  • Intermediate and Senior Accountants required

    Useful Information14/06/2019

    dVT Group is a specialist accounting and advisory firm.  For 25 years we have been providing services including Business Turnaround, Corporate and Personal Insolvency, Business Strategy and specialist consulting areas such as business valuations and expert reports.

    We are looking for Intermediate and Senior Accountants to join both our Parramatta and City team.

    We provide a great atmosphere working in a dynamic team alongside like-minded colleagues, and with career development opportunities for the right candidate.

    About the role:

    The successful applicant will work with a dynamic team and report to a Manager and partners, with the key objectives of the role being:

    • Be responsible for a range of insolvency administrations;
    • Complete investigations including analysis of financial statements and accounting records;
    • Prepare reports to external stakeholders;
    • Be willing to train and mentor junior staff in the team;
    • Enjoy working in a rewarding and sometimes challenging environment.

    The successful applicant will have:

    • Relevant corporate insolvency experience – minimum 3 years;
    • Completed the ARITA Advanced Certification (or equivalent);
    • Ideally CA/CPA qualification or be currently completing;
    • Proven investigation skills;
    • Strong communication, interpersonal and business acumen capabilities;
    • Excellent attention to detail with high degree of accuracy;
    • A responsible and proactive attitude and approach;
    • Competent computer skills (Excel, Word, Outlook, and ideally MYOB).

    In return, dVT Group will provide a challenging and stimulating work environment with ongoing training and mentoring from senior staff, and exposure to a wide range of work and career progression opportunities.  Our firm culture encourages individuality and openness without the restrictions sometimes found at the big end of town.

    If you have a passion for the insolvency industry, are career orientated and possess the ability to be a self-starter, please submit your resume to Anne Floyd at afloyd@dvtgroup.com.au.

    Only applicants with the above requirements need apply and only successful applicants will be contacted.

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  • As an employer, how do you know if you are correctly managing multiple awards? 

    News Articles07/06/2019
    • Do you need to manage multiple awards for employee pay and entitlements in your workplace?
    • Have you noticed the increased instances of where employers are underpaying employees?
    • Are you confused and not sure if you are paying your employees correctly?

    You’re not alone!

    It seems that we are getting more and more enquiries from businesses who are finding it more and more difficult to manage the multiple awards and are concerned that they may not be getting it right, and frankly, there are good reasons for those concerns!

    Widespread media reports on the outcome of cases such as the 7-Eleven underpayments have created an awareness of these workplace compliance issues, but it seems to us that it is now dawning on businesses that they, too, could be in the same position.  Not necessarily because of deliberate underpayment or false records, but through the devilish detail of compliance.

    And we’re not talking small change here – in 2018 casual workers with Energy Australia shared in $5 million backpay, while in 2016 Chemist Warehouse was forced to pack-pay $3.5 million to workers.  Research by Tsheets by Quickbooks[1]  reveals that Fair Work violations are costing Australian employers a staggering average of $27 million per annum in back pay.

    So what makes life so difficult that compliance becomes an issue?

    There have been a number of changes in our business structures and we think these have contributed to these difficulties.

    Firstly, employment in business today is much more complex than a couple of decades ago.  Changes to Fair Work legislation over the past few years has simplified employment conditions in many areas, but at the same time, we are still dealing with over 120 Modern Awards and legislation that has more than 850 sections and amendments.

    Businesses are complex in their structures – you might be running a business with a number of different roles or functions, which means that your employees might not all come under the same Modern Award.  So you will need to work out which Awards specifically apply to which employees and roles.

    Complex wage awards can also make it difficult for employers to ensure they are paying workers correctly.  Even the Fair Work Ombudsman, Sandra Parker, admits the awards are a challenge for business to understand.  “There is no question that managing multiple awards can be  complicated ….. there is no question that small businesses struggle with ensuring that their workers are being paid correctly. ” 2

    Secondly, staff has changed their roles and there is a widespread acceptance of flexibility in the workplace through full-time or part-time or casual working arrangements.  There has been more focus on the entitlements for casual employees – you now have short term casual employees and long term casual employees, with different entitlements.  Combined with increased working hours extending over weekends and public holidays, this has made the calculation of employee pay and entitlements more complex than it has ever been in the past.

    Take annual leave, for example – some of the Modern Awards we have recently reviewed specify that annual leave is based on standard rates.  That sounds simple enough, but in fact, there is often no definition of “standard rates,” and it is interpreted to mean what the employee generally earns.  If that employee works a mix of shifts and overtime, this can certainly move the standard hours away from the “normal” 9 to 5, Monday to Friday rates that would previously have influenced leave calculations.  Allowances are another key feature of awards that need to be properly understood and applied – often these are linked to positions or shifts and can vary depending on things like the number of consecutive shifts.  This can make it very difficult for payroll software to apply the correct rates and allowances automatically and may require manual checking of transactions – that in itself has a risk of human error, so it’s not always an optimal solution either.

    Another influence is whistleblowing – there has been a shift in employee culture, from turning a blind eye to underpayment of employees and the like, to major increases in the number of complaints made by employees to the Fair Work Ombudsman.  Fair Work even has an online Anonymous Report tool to assist the lodgement of complaints, and at February 2018 the regulator had received more than 20,000 tip-offs.

    Although the company has an obligation to pay its employees, the corporate veil between the company and its directors and managers is being torn apart.  If the above is not enough of a warning, consider the implications of underpayment of staff for business owners.  It has been pretty well understood that the Fair Work Act provides for fines to be made personally against company directors and managers where they have been involved in the corporate employer’s underpayment or sham contracting activity.  In fact, under Section 550 of the Fair Work Act, prosecution can include any person in the organisation or third party believed to be involved in the contravention – this can be the company’s director, HR manager, accountant or a supplier!  Recent court decisions 3 confirm that accessories to these underpayments can also be liable to compensate the claimants – so it’s no longer just about fines and penalties but also some serious financial liability.

    Clearly, personal liability of directors and officers is increasingly the objective of the Fair Work Ombudsman.  The FWO’s 2017-2018 annual report indicates that the FWO has continued to pursue its objective of targeting individuals involved in underpayment claims.

    Let’s not forget the Australian Taxation Office and Revenue NSW, who may also come after both the company and its directors for unpaid taxes.  Combined with the personal liability for underpaying employees, the risk and responsibilities of running a business are continuing to climb.

    The federal government has also given “in principle” support for 22 recommendations made by the Migrant Workers’ Taskforce report, which could introduce jail time for employers flouting workplace laws.

    Awareness of the issues of workplace compliance is crucial:

    because it also means that you can’t hide behind the cover of “didn’t know I was doing wrong” – the publicity alone ensures that there is now a reasonable expectation that all employers need to ensure they are fully complying with the law.  Now is the time to assess your business (or that of your clients) and ask:

    • Is the business in a high-risk area – e.g. does it have numerous employees at different levels of employment?
    • Do I really understand the multiple award(s) that apply to those employees?
    • Have I applied the award correctly and am I paying my employees correctly in all instances?
    • If there is something wrong, what might be the implications?

    dVT Group are already assisting a number of clients with review of their payroll transactions over the past few years.  Together with employment law specialists, we are assisting with interpretation of awards and how they apply to businesses, recalculating pays, and highlighting variances.

    Should you, or one of your clients, need help with managing workplace compliance, contact Suelen McCallum or Riad Tayeh on 02 9633 3333, email mail@dvtgroup.com.au or complete our online contact form to find out more about how we can help.

     

    [1] https://www.tsheets.com.au/penalty-cuts/ [21 May 2019]

    [2] FWO Sandra Parker, reported in Sydney Morning Herald [16 November 2018]

    [3] Fair Work Ombudsman v Priority Matters Pty Ltd & Anor (No 4) [2019] FCCA 56

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  • A successful business plan can start with a hands-on workshop….

    Business Strategy Articles News Articles

    How every existing small to medium business can have clear direction….

    We all know that having a business plan can make the difference between a successful start-up and a failed venture, but not all business owners and entrepreneurs recognise the importance of having one or does not have the time or skills to do one.

    A survey by NAB (National Australia Bank) found that one third of Australian small businesses fail because they don’t have a business plan. Despite this, 40% of small businesses don’t have one, and 21% of Australian small business owners say they don’t have time to write one.

    A business plan helps business owners:

    • Provides clarity on the future direction of the business;
    • Provide alignment of personal and business goals and objectives;
    • Creates focus;
    • Identifies all the actions required within a business to grow in a low risk manner;
    • Prioritises the often-multiple actions required within a business;
    • Provides practical and realistic recommendations suitable to a small to medium business with limited resources on how to implement the recommendations.

    dVT Strategy have identified and understands the need in the market for this type of offering and have put together a package that is perfect for existing small to medium business owners looking to refresh their business plan or for start-up businesses wanting to establish and document their first strategy.

    We have a four-step process comprising:

    1. An initial meeting and inspection of your work business environment and key people;
    2. Collection and analysis of background information;
    3. An approximately four-hour workshop;
    4. Presentation of a completed business plan and discussion of the findings.

    Who would benefit?

    Targeted at business owners from all stages of their business, whether it’s sole traders seeking to incorporate their business, start-ups, growth business or businesses seeking to turnaround and transform.  It is also useful for owners seeking business acumen and expertise to refresh their current strategy.

    Who is involved in the Workshop exercises?

    The workshop exercise will be run by one of our senior management consultants with the support of one of our analysts.

    We also recommend the workshops involve both the owners of the business and key staff to gain a more holistic view of the business.

    Our Offer

    At dVT Strategy, we believe in helping business owners to clarify both their personal and business goals and then work with them to identify solutions and methodologies to achieve these goals. Conducting a Strategic Workshop has proven to be a quick, effective and a low cost, low risk method for business owners to get their business moving in the right direction.

    What can you expect to gain from this?

    The business strategy workshop will provide you with a holistic look at your business. It will:

    • Provide you with industry research;
    • Identify potential options for growth as well as manage the risks and bottlenecks;
    • Identify a series of recommendations and actions required to drive your business towards growth and/or to manage risks;
    • Help you develop & document a business plan.

    What does the Workshop exercise cost?

    We have developed a specific package that includes all of the above for a total cost of $6,000 plus GST.

    How do I get started?

    If you are a business owner who would like a Business Strategy Workshop for your business, please contact Brendan Ryan at dVT Strategy on 02 9633 333, email brendan@dvtgroup.com.au or complete our online contact form to book in a free, no obligations initial discussion at your work premises.

     

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  • “Don’t be a frog” … how a distressed business can resemble a boiled frog.

    Business Strategy Articles News Articles16/05/2019

    We are all familiar with the boiled frog scenario…  a frog will jump straight out if thrown into a pot of boiling water, but if a frog is placed in a pot of cool water that is gradually heated, it will not notice the slow, gradual change. The result? It will literally be boiled alive because it won’t know what is happening until it is too late to do anything about it.

    Just like the frog, small business owners often have an inability to react to changes that happen gradually. If we ignore the warning signs of potential problems within our business, we can end up just like the frog. The business, which the owner worked so hard to build, will die a slow death that they won’t see coming until it is too late to change course. And that’s where a business advisor can help.

    This is often a result of complacency by a business proprietor. So, how can you as a key influencer in a business – whether you’re an accountant, lawyer or financial advisor working with the business owner – help monitor the warning signs and make sure that business owners beat the odds and avoid falling victim to ‘boiling frog syndrome’?

    Financial warning signs

    No business is immune to some financial strain and stress. But with proper guidance and planning, these problems can be alleviated. A business gradually accumulating more debt while its cash flow suffers is a warning sign that the owner is heading for trouble.

    A drop-in revenue, whether sudden or gradual, coupled with increasing costs, will lead to a failure to meet mandatory obligations such as employee superannuation contributions and business tax payments. Costs will inevitably be cut in a bid to break even.

    Failing to collect debts owed to the business, or pay creditors, are also cause for concern. A business might be experiencing an increase in sales and profit on paper, but if they don’t actually receive the payments the business is not healthy.

    To help track these potential problems, a business owner needs to have in place good administration practices and robust systems to ensure both they and their accountant are getting quality information in a timely and accurate manner.

    Having quality accounting is critical. Work closely with a bookkeeper, accountant or business financial advisor who understands the business and structures the accounts in a way that can be easily understood by the owner.

    At the most basic level, business owners should have a clear understanding of their cash flow position, their profit and loss and the overall state of their balance sheet to avoid financial strife.

    It is also crucial for a business owner to understand the breakeven point – that is, what level of products or services you need to sell to cover fixed and variable costs – as well as the activity and return on capital employed.

    Management warning signs

    So often business failure is blamed on financial problems and issues beyond the business owner’s control. However, just as often it is the managing of people that leads businesses to fail.

    High turnover of staff, particularly when the best people leave, is a major sign that there are problems. Of course, there will always be people leaving a business for very legitimate reasons, but if the rate of turnover begins to increase, it should be taken as a warning sign.

    The same applies to absenteeism. If there is an increase in sick leave or unexplained absences of employees, then investigations should be undertaken.

    For the business owner, there is also their own motivation to consider. If a previously passionate business owner gets out of bed on Monday morning and dreads going to work in their own business where they love being the boss, then what’s behind that apathy needs to be examined by the key influencers who work closely with the business owner.

    What can you do before it’s too late?

    The most important thing is to take action if the above-mentioned warning signs have been identified. This doesn’t mean work harder; the action needs to be taken on a strategic level. The business owner needs to step back from the day to day events so their accountant, financial advisor or other key influencers can help figure out what has changed, what has gone wrong and come up with a solid plan that actually changes the way the business owner and the company is operating.

    It is at this point where it becomes beneficial to seek outside support from a specialised expert such as a business advisor who knows how to help underperforming companies. Performance improvements can include cost-cutting and other operational initiatives, combined with debt restructuring while those actions are taken.

    Contact Antony Resnick on 02 9633 3333 or complete our online contact form to find out more about how we can help avoid the ‘boiled frog syndrome’.

     

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  • How the right turnaround management specialist is a viable solution for struggling businesses.

    Business Strategy Articles News Articles

    Turnaround management is not often used for struggling small businesses.   When otherwise good businesses experience financial difficulty, they have limited options for help. Most would simply opt for voluntary administration or liquidation.

    There is a softer approach to addressing this business issue. It is turnaround management, which focuses primarily on the strategic, financial and operational management of a struggling but viable business. Turnaround management is a method aimed at returning a business to profitability through business restructuring. In these cases, directors often know what’s going wrong with their business, but struggle to make the necessary changes.

    Why engage a turnaround management specialist?

    By engaging a turnaround management specialist, you are engaging an external advisor who is not caught up in the politics and emotion of running a business. This enables turnaround management specialists to provide clear, concise and creative solutions for business difficulties, which thereby allows owners to focus on the business rather than reacting to its pressures.

    Typically, the steps a turnaround management specialist may take will include:

    Analysing the current status of an organisation;

    • Pinpointing areas that require immediate action;
    • Identifying areas that will benefit from longer term strategic change; and
    • Putting a business plan in place to secure long-term growth and sustainability.

    When seeking a turnaround management expert, here’s a few qualities you should be looking for.

    Complete objectivity

    A professional turnaround management expert should enter a company with a fresh eye and complete objectivity. They must be able to spot issues and create solutions to problems that may not be visible to company insiders. The turnaround leader should have no political agenda or other obligation to bias the decision-making process, allowing them to take the sometimes unpopular, yet necessary steps for business restructuring and survival.

    They should bring business skills, not necessarily industry specific skills.  Often people from outside the industry can better question certain behaviours.

    Leadership qualities

    During the turnaround process, it is essential that the consultant has the ability to help lead and control the process. They must show excellent negotiating and interviewing skills at all levels of business. They must also possess the ability to quickly grasp key concepts within the business and take action in a confident, authentic and inspirational way.

    Sector expertise not required

    In many cases, having a leader from outside of your industry is an advantage as they bring a different perspective and can generally work better with management and staff.  The problems in business are rarely sector specific. They usually centre around management, leadership or financials issues.

    Business and technical skills

    The turnaround management leader needs to be able to examine one element of the business after the other and understand how that element balances with
    the overall business picture. The consultant must have the business and technical skills to apply sound practices of turnaround management to successfully navigate distressed businesses through the business restructuring process.

    Boldness and trust

    Trust is often in short supply at the start of a turnaround process. A turnaround management professional needs to develop trust with the directors and management team quickly in order to be effective. They also need to be bold in order to provide the right advice. This boldness needs to be tempered with a temptation to become a bit reckless, which is perhaps why an organisation is in trouble in the first place.

    The key objective for any business restructuring via turnaround management is to achieve the survival and future profitability of the business or, if that is not achievable, to find and achieve better financial outcomes than liquidation.

    Should you or one of your clients wish to talk to us about the state of a business while we can still help, contact Riad Tayeh on 02 9633 3333, email mail@dvtgroup.com.au or complete our online contact form  to find out more about how we can help you.

     

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  • The progression from tax stamps to single touch payroll.

    News Articles

    Do you remember the tax stamp system that was around in the early and middle of the 20th Century?  It was not that long ago that things were very different, and employers were “affixing” various stamps to “tax check sheets”. Today, we are reporting to the ATO as it happens!

    Single Touch Payroll (STP)

    STP is the term used for “pay day reporting by employers to the ATO as it happens”. It became a requirement on 1 July 2018 for large employers, that is 20 or more employees.

    From 1 July 2019, the tax office’s STP system will NOW also apply to all small employers (those with fewer than 20 employees). While any change like this for small business can be daunting, it is, as the ATO says, “an important step in streamlining business reporting and keeping pace with the digital age”.

    We should remember that this digital age does allow efficiencies once the details are bedded down.  And the system is fairer for all when tax collection is universal.

    Tax stamps

    Some of us may remember tax stamps, going back to the early and middle of the 20th century. These were like an ordinary postage stamp but were in various amounts of currency. The stamps were purchased by employers and were used to pay their employee withholding deductions.

    In those pre-digital days, wages were paid in cash. Employers needed to go to the bank and bring back some hundreds of pounds, shillings and pence to pay their employees.

    Tax stamps were at least a bit safer than cash as a way of paying taxes. An example is former s 221G of the Income Tax Assessment Act 1936. An employer had to keep a “tax deduction sheet” and at the time of paying the wages “purchase and securely affix in the space provided for the purpose on the tax stamps sheet” tax stamps of a face value equal to the amount of the deductions made from the wages of the employees paid during the relevant period.

    TAX STAMP 1

    And, at the time of affixing a tax stamp, the employer had to securely affix the corresponding tax check on the ‘tax check sheet’ being “the portion of a tax deduction sheet provided for the affixing of tax checks”; and “cancel the tax stamp and tax check by writing his name thereon in ink”. The word “adhesive” sometimes appears in the law as a requirement of stamps to allow them to be affixed.

    The employer had to then “complete and sign the tax stamps certificate and deliver it, together with the tax stamps sheet”, to that employee.

    There were tax stamps for a range of other taxes, including alcohol, entertainment and customs duty. Departure tax was paid by stamps until 1994.

    TAX STAMP 2

    The law-imposed liabilities on employers who “refused or failed to … affix tax stamps of a face value equal to the amount of the deduction”.

    Preparation for STP

    Coming back to today’s STP seems like another world.  The ATO says it is working with software providers to develop low and no-cost reporting solutions including simple payroll solutions, portals and mobile apps. The ATO has published a list of providers on its website at ato.gov.au/stpsolutions.

    The Tax Commissioner has given his “personal guarantee” that the ATO’s approach to extending STP will be “flexible, reasonable and pragmatic”. In particular, the ATO says it understands there will be circumstances where more time is needed to implement STP or lodge reports.

    Details of the support being offered by the ATO are at this link. The ATO reports that many small employers have already taken up STP reporting and they have provided positive feedback that STP makes payroll reporting easier.

    In the context of history, it does beat loads of cash and employers affixing various stamps to tax check sheets.

    As to the future, over the next year or two, most employers will be on board with the new STP reporting. Directors should be cognisant that once reported then payment is required by the due date. If there is a blip in one’s payment, directors may be vulnerable personally and recognised much sooner by the ATO than previously. There are anecdotal reports that if an employer has not paid their employees’ superannuation payment for the period, then the system may lock the employer out of lodging the next period superannuation report.

    So, in summary, while the mechanisms for payment of employee taxes might have radically changed over the years, the same policy applies; that is, the responsibility of the employer to deduct and pay their employees taxes, super etc remains the same.  And just as there were penalties for not affixing the correct amount of tax stamps, there are penalties now for employers not recording via STP and then paying the correct amount of tax withholdings.  As stated in various recent headlines – you could say it was “wage theft”!

    If your clients are facing cashflow problems and/or showing signs of difficulty keeping up with any obligations, you may wish to refer them to our expert, Suelen McCallum of dVT Group who may be able to assist them.

    If you believe your client needs more assistance and the problem may be terminal, then please refer them as soon as possible to David Solomons who will assist your client and minimise the impact where possible.

    To contact us, please call Suelen or David on (02) 9633 3333, email
    mail@dvtgroup.com.au or complete our online contact form to find out more about how we can help you.

    dVT Group is a business advisory firm that specialise in business turnaround, insolvency (both corporate and personal), forensic services and business strategy support.

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  • Luxtown Pty Ltd A.C.N. 002 114 105 (In Liquidation) (“the Company”)

    Creditor Reports17/04/2019

    We advise that on 30 May 2019, Mark Robinson, Antony Resnick and Riad Tayeh were appointed Joint and Several Liquidators of the Company.

    By proceeding to view information about the Company, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidators in their investigations into the affairs of the company, please do not hesitate to contact Tony Hui of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    To view the Liquidators’ Second Report to Creditors dated 30 August 2019, click here ...  Report to Creditors August 2019

     

    Mark Robinson, Riad Tayeh and Antony Resnick were appointed Joint and Several Administrators of the Company by resolutions of the Company’s directors on 15 April 2019.  At the meeting of creditors held on 30th May 2019, creditors resolved to place the Company into liquidation and appointed Mark Robinson, Riad Tayeh and Antony Resnick as joint and several liquidators.

    The company being:

    Luxtown Pty Ltd
    ATF P.R. And K.M. Hammerman Family Trust;
    ATF 2nds World Caringbah Trust;
    ATF 2nds World Penrith Trust;
    ATF 2nds World Auburn Trust;
    ATF 2nds World Castle Hill Trust;
    ATF 2nds World Online Trust;
    ATF Bargain Appliances Online Trust;
    ATF Savvy Appliances Family Trust; and
    ATF Appliance Solutions Direct Family Trust
    A.C.N. 002 114 105

    (in Liquidation) (“the Company”)

    By proceeding to view information about the Company, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    If you believe you are a creditor of the Company or if you hold information which may assist the Liquidators with their investigations into the affairs of the Company, please do not hesitate to contact Tony Hui or Chris Skepevski of this office on +612 9633 3333 or by email at mail@dvtgroup.com.au.

    To view the Liquidator’s Initial Report to Creditors dated 13 June 2019, click here …….  Liquidators Initial Notice to Creditors

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  • International Fashion Group Pty Ltd (In Liquidation)

    Creditor Reports09/04/2019

    We advise that on 26 March 2019, Antony Resnick and Riad Tayeh were appointed Joint and Several Liquidators of the Company.

    By proceeding to view information about the Company, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    If you believe you are a creditor of the company or if you hold information which may assist the Liquidators in their investigations into the affairs of the company, please do not hesitate to contact Tony Hui of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    To view the Liquidators Initial Notification to Creditors and Statutory Report to Creditors dated 9 April 2019, click here. 2019-4-9 Initial and Statutory Report to Creditors
    The Report to Creditors includes information on:

    • Update on progress of the liquidation;
    • Details of assets realised to date;
    • Details of the liabilities in the liquidation;
    • Details of investigations undertaken to date; and
    • Advice on the dividend expected in the liquidation.
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  • Don’t miss out on Government assistance ahead of the Federal Election.

    Business Strategy Articles News Articles21/03/2019

    Many small business owners are unaware of the many Government grants available to them and with a Federal election looming they need to act now.

    There’s a range of grants and support services that make it more affordable to invest in a business and achieve an excellent return on investment. Once the Federal election is called, which is widely speculated to be May 2019, the grants programs will go on hold and depending on the election outcome, things could change.

    SME owners really have around 3-4 weeks before the Federal Government goes into pre-election caretaker mode, when all grant applications will go on hold until after the election. Then if we have a change to Labor the program may be completely revamped.  So the window of opportunity it short.

    Entrepreneur, Peter Lynch, who amongst other businesses supplies flowers and potted herbs to the grocery trade in Sydney has had a long relationship with dVT.  He says “I’m an ideas person. I can see where I want to get to with a business idea and dVT help me implement it.  dVT give my ideas structure and provide me with critical advice on processes, procedures and how to implement my business such as structuring a management team and reviewing budgets. They guide me along and give me an objective opinion.”

    The main grants program that dVT focuses on with its clients is the Federal Government’s Entrepreneurs’ Programme which is a flagship initiative for business competitiveness and productivity.

    We have secured more than 100 grants on behalf of our clients in the last three years with a 100 per cent success rate in securing funding. We then use the funding to work with clients on really tangible growth programs.

    The Entrepreneurs’ Programme isn’t for everyone and has some fairly specific criteria around years in business, turnover, industry sector and unsurprisingly there is a focus on growth. There are a number of components to it; including business evaluation, growth and research and development.

    Our focus with clients is not on the financials of the business, most already have an accountant for that. We focus on areas that impact the growth and help clients with developing business objectives. Our clients are really busy people, so we work with them on setting goals and objectives and then taking small steps to achieve those.

    If you are or know a small business owner who wants to take their enterprise to the next level but don’t know how to achieve it, then we would be happy to help.

    dVT Strategy helps business owners identify and implement strategies to improve and grow their business. We take a holistic approach, encompassing elements such as operations, HR, sales and marketing and finance.  Should you require assistance with your business or grants, contact Brendan Ryan from dVT Strategy for an interview on 02 9633 333 or email mail@dvtgroup.com.au.

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  • A long overdue update to the RATA form used in insolvency.

    News Articles20/03/2019

    After using more or less the same format for over 120 years, ASIC has finally replaced the RATA (Report As To Affairs) form with a ROCAP (Report On Company Activities And Property). As with anything new, it will take time to get used to the form, but we’re here to help!

    The RATA is one of the most commonly used forms in corporate insolvency administrations. Its purpose is to show the financial position of a company at the date it enters into liquidation or other external administration. The form gives external administrators information that enables them to identify assets, contact creditors, carry out investigations and estimate potential dividends.

    It is also a complex form and for many years has been regarded as outdated. There have been decades of discussions, surveys and comparisons with other countries and now, after an extensive revision process, a more relevant and comprehensible form has been released. Unfortunately, there was little direct consultation with the body of insolvency practitioners, so the content is as much of a surprise to us as it will be to your clients.

    Nevertheless, a working model of the new RATA is here. The Report On Company Activities And Property (ROCAP) was introduced in November 2018 and it is now compulsory to use the new form, as of 1 February 2019.

    About the form:

    • It is designed to reflect ‘best practice’ and uses behavioural design tools to assist insolvency practitioners (IPs) in doing their job. It is claimed that the revised form allows IPs to obtain better information about events leading up to their insolvency appointment, which might be useful and relevant to IPs’ investigations, asset recoveries and reporting to creditors and to ASIC.
    • It consists of two parts, with instructions.

    Part A: with attachments, is lodged with ASIC and therefore goes on the public record. It consists of a series of questions about debts owing to and by the company and assets owned by the company. The questions are general and most can be answered with a simple ‘tick the box’ approach.   For most questions, directors are required to read the instructions and provide a supporting attachment.

    Part B: is essentially a questionnaire about the company’s activities and since it contains information of a personal nature, is available only to the external administrator. The areas covered include management; books and records; company history and activities; and payment arrangements. Part B IS NOT lodged with ASIC.

    • The biggest change in the new ROCAP form is that directors are no longer required to provide a summary financial statement for the company, but to focus instead on information about the company’s assets, liabilities and activities. More information than figures, so to speak!

    Benefits of the new form:

    • It aims to lower costs, by reducing the time that IPs spend dealing with multiple forms and letters (such as a separate director’s questionnaire) to gather information from directors about their insolvent company. It is claimed that directors now have a form which, as testing shows, will be easier for them to complete.
    • It is argued that the changes will make directors more inclined to provide the information sought and to provide the correct information. This will reduce the time spent following up information not initially provided by directors and the number of requests from liquidators under ASIC’s Liquidator Assistance Program.
    • Attachments for specific questions can be printed directly from most accounting software, which saves time when filling in forms.
    • The detailed, easy-to-follow instructions cater for varying ability levels and allow the director/officer to move easily between the form and the instructions as they complete the form. The instructions also include examples that show how to answer questions.

    At 50 pages, however, the sheer size of the ROCAP is daunting. It is more than 5 times the size of the current form and 2-3 times larger than comparable forms in other countries.

    As advisors to your clients, you will often be called upon to assist them in completing forms. We are keen to help you understand this new form so you can provide the best possible service. To be fair, it’s also in our best interests; we can only do our job properly if we have the right information.

    At dVT Group, we are focused on helping all stakeholders, and we do this by ensuring we get the right information, on time, from directors. If we can help you to help your clients by explaining the new ROCAP in more detail, please feel free to contact Suelen McCallum at dVT Group on (02) 9633 3333 or by email at mail@dvtgroup.com.au.

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  • Fail-Safe Measures for Pharmacies.

    News Articles

    A proposed change to the law will ensure that the essential services provided by Australian Pharmacies will be maintained, even if an individual business experiences financial problems.

    Pharmacists provide services that are a vital part of our health system. It is therefore important that any disruption to the public’s access to the supply of PBS medicines should be avoided, particularly in rural and more remote parts of Australia.

    With that in mind, the Government is proposing a change in the law, which would ensure the continued operation of a pharmacy if the business itself were to encounter financial difficulties or failure.

    If the pharmacist goes bankrupt, or the company through which the pharmacy operates goes into liquidation, it might be necessary for the pharmacist to be replaced. In that event, under our insolvency law, an insolvency practitioner (IP) is appointed to take control of the pharmacy business and either try to save the business or sell it to allow creditors to be repaid to the extent possible.

    What will the change mean? 

    The proposed new law – in the form of the National Health Amendment (Pharmaceutical Benefits) Bill 2019 – is yet to go through Parliament.

    • The change in the law would give the Secretary of the Commonwealth Department of Health the power to grant permission to an appointed insolvency administrator to manage the supply of PBS medicines at the pharmacy premises for such time as the business options are being worked out.
    • The practitioner would not, of course, be involved in the actual process of dispensing medicines; an authorised pharmacist – who might be the original pharmacist, or another pharmacist – would need to be engaged.
    • The proposed law would say that while the IP ‘is not as a matter of law an approved pharmacist’, the IP ‘is treated as such’.

    Specific issues related to pharmacies: 

    According to the Explanatory Memorandum, about 20 pharmacies enter insolvency each year.  This might happen for a variety of reasons including competition, business pressures and external factors.

    Recent court proceedings with regard to one of these have revealed a concern about the existing legal approaches, given that the registration of a pharmacist is personal, based on his or her qualifications and experience, and does not pass to a trustee or liquidator as a matter of law.

    Given their highly regulated nature, pharmacy businesses present particular concerns for an IP. Regulation necessarily covers:

    • The high security and careful dispensing of specialised medicines
    • Issues connected with pharmacists’ dealings with the medical profession and their patients and with government health regulators
    • The high standards that must be met with regard to pharmacy premises and the public’s access to them.

    dVT Group has wide experience with pharmacies, in the role of insolvency appointee as either external administrator or trustee. Despite the wording of this proposed law, it is certainly not appropriate for the practitioner to assume the role and responsibility of a registered pharmacist.

    Some basic steps in the process:

    Engaging a pharmacist

    In cases where we have been appointed, if the bankrupt pharmacist or company director pharmacist is not available (and this will depend on the particular circumstances) then a registered locum pharmacist is engaged to assist with the process. If we can engage the existing pharmacist, we are careful to ensure that all financial matters remain under the control of the trustee or the liquidator.

    Taking a stock count

    This is an important initial task in any pharmacy administration. A detailed stock count should be taken, at the date of appointment, in conjunction with the wholesaler (if the pharmacy is vertically integrated/branded). The perpetual stock count list should be adjusted as and when prescription medications are sold. If there is no wholesaler, then the bankrupt, if he or she is the registered pharmacist, should oversee the stock count under supervision

    We see this process as similar to that followed in other regulated industries, to which we have been appointed. There is a need to focus on the complexities of the regulated business, as well as the financial side of the business and its insolvency.

    Health services generally, and pharmacies in particular, provide examples of the balance between ensuring there is minimum disruption to important health services and resolving the financial difficulties of the individual business.

    Should you require assistance in relation to the above, please contact David Solomons or Mark Robinson from dVT Group on 02 9633 333 or email mail@dvtgroup.com.au

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  • International Fashion Group Pty Limited (Administrators Appointed) (“the Company”)

    Creditor Reports19/03/2019

    We advise that on 19 February 2019, Antony Resnick and Riad Tayeh were appointed Joint and Several Administrators of the Company.

    By proceeding to view information about the Company, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    If you believe you are a creditor of the company or if you hold information which may assist the Administrators in their investigations into the affairs of the company, please do not hesitate to contact Tony Hui of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    To view the Administrator’s Second Report to Creditors dated 18 March 2019, click here ...   Second Report to Creditors

     

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  • Welcome Mark Robinson to dVT Group

    Announcements Uncategorized06/02/2019

    We are pleased to announce that Mark Robinson has joined the dVT Group. 

    Mark-Robinson-revised

    Mark has over 25 years of experience in the areas of turnaround and insolvency, as well as strategy, operations and risk management.  He has also spent many years liaising with domestic and foreign professional associations, government regulators and law makers.   

    He is a commercially focused professional with a solid track record in stakeholder management and consistently delivering focused strategies, whilst remaining adaptable and approachable. 

    Antony Resnick, partner at dVT Group says, “Mark brings to our firm a wealth of experience across multiple disciplines and we are very excited for him to apply these skills to drive the Bankruptcy area of our business to realise its full potential and to complement dVT Group’s other insolvency services”. 

    Mark commenced his career as a lieutenant in the Royal Australian Navy before joining Australian Financial Security Authority (AFSA) in 1991.  He then commenced at PPB Advisory in 1997, later becoming a partner in 2001 and Chief Operations Officer in 2017, both until recently.  Mark is a past President of Australian Restructuring Insolvency & Turnaround Association (ARITA) and a past President of INSOL International.  He is a Registered Liquidator and Trustee in Bankruptcy.  

    Mark joined our firm this week and says “I have been warmly welcomed into the firm and look forward to helping the highly collaborative, straight talking and experienced dVT team continue to develop, grow and succeed.  In particular, I relish the challenge of identifying and implementing the best solutions as part of each and every insolvency appointment”. 

    Mark attributes his success to his passion of working at the coalface with clients and stakeholders and leveraging his wealth of experience and networks to deliver great outcomes. 

    We are elated to have Mark join our firm and hope you will join us in congratulating him and that you will enjoy your dealings with him and our professional team.

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  • Merry Christmas 2018

    Announcements11/12/2018

    As the end of year fast approaches,
    the team at dVT Group would like to wish you
    well for the festive season and hope that you enjoy your break.  

    Our office will be closed from Friday, 21st December 2018
    until Monday, 7th January 2019.
     

     

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  • The Unique Value Proposition: The offer they can’t refuse!

    Business Strategy Articles News Articles20/11/2018

    Having a powerful UVP is crucial to provide clarity and assurance to customers that you have an irresistible offering, whilst giving direction and focus within a business.  

    When you market your products or services, it’s important that your target customers perceive them to be superior to similar products or services in the market. To make sure this happens, you must identify the competitive advantages of what you are offering. When these are clear to you, you can then communicate to customers what makes you different from your competitors, and what extra value your products or services provide.

    Basically, you’re making an offer your customers should find irresistible. It also means you can charge a higher price than if you were providing the same level of value as everyone else in the market.

    The best way to communicate this message to customers is through a Unique Value Proposition (UVP).  A UVP is a statement that outlines the reasons customers should buy your products or services. It is not a slogan, a motto or a catchphrase; rather it is a descriptive statement that aims to convince customers that your products or services will provide more benefits and value than those offered by your competitors.

    A UVP targets your ideal market

    Your target market is made up of potential customers who you believe will gain the most from using your products or services.

    Your UVP communicates the key reasons why your products or services are best suited to this market. It should answer four key questions:

    To whom are you selling?

    1. Which of their needs do your products or services satisfy?
    2. What unique value and benefits do you provide?
    3. What differentiates you from your competitors?

    A UVP aligns with your core business purposes

    An effective UVP permeates everything that you do.

    It attracts customers to your business:

    • Display it on your business website.
    • Include in marketing material and other touch points that are put in front of your target market.
    • Make sure its message is clear. Customers should be able to read the UVP and understand the value and benefits without the need for further explanation. If they find it hard to understand, they are more likely to purchase products and services from businesses that provide them with a clearer value proposition.

    It creates direction and clarity within your business:

    • Used internally, it crystallises the business’ fundamental activities.
    • Your UVP helps you define your ideal target market and identify and understand its core needs.
    • It also identifies the initiatives and features that have the greatest impact on meeting those needs.
    • A clear UVP avoids the waste of money, time and effort spent on products or services that are not attractive to your target market, and pointless attempts to sell to customers who won’t purchase from you. 

    Formulating your UVP

    The best method of discovering what is attractive and important to your target market is to ask. Speak directly with your customers. You can do this using a ‘Voice of the Customer’ (VOC) exercise. The feedback then forms the basis for your business’ value, vision and mission statements, which, in turn, help shape your UVP.

    The VOC also helps direct your marketing efforts, by focusing on those activities that will generate the best results. When you understand your customers and their core needs, you can concentrate on the marketing channels that are most relevant and will most effectively communicate the benefits and values of your products or services.

    One important thing to remember: you don’t sell products or services; you sell benefits and values. Therefore, a successful UVP will be easy to understand and will outline the genuine value and real results customers will experience when they use your products or services. The more value you provide, compared with what your competition offers, the higher the price you can charge.

    At dVT Strategy, we have dealt with a number of clients who are unclear about their UVP – or have never formulated one. In face-to-face workshops, we help them identify their differentiators, and create effective UVPs to form the basis for their sales, marketing and product development efforts.

    As a result, our clients see benefits such as:

    • Better quality and greater quantity of leads
    • Increases in lead conversion and growth in sales
    • Greater focus from staff
    • More consistency across the business, as everyone communicates the same message

    Your UVP works on many levels. It provides clarity and assurance to customers. Used internally, it also guides and focuses staff, and clearly embodies your businesses brand. A powerful UVP is one of the most important resources that you will develop, whether you are starting up or launching a new plan within an established business.

    If you are a business owner who is interested in identifying and developing your business’ unique value proposition in order to realise the benefits mentioned above, contact Brendan Ryan at dVT Strategy on 02 9633 333 or email brendan@dvtgroup.com.au.

     

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  • Who’s who in your business? The importance of clear status.

    News Articles Uncategorized

    Recent cases have alerted businesses to the importance of establishing, with absolute clarity, the status of the people they engage. Employees? Contractors? Directors? Read about how business owners and individuals concerned can be protected. 

    Whether people engaged by a business are employees, casuals or independent contractors has always been an important issue – for the business, and for the individuals concerned.

    The decision of the Full Federal Court (WorkPac Pty Ltd v Skene [2018] FCAFC131) has rejected the commonly applied position that an employee described as a casual under an award or enterprise agreement is a casual for all purposes (i.e. describing an employee as a casual and paying them a casual loading is not sufficient to make them a casual at law).   

    These outcomes have consequences, so employers need to make the important distinction between employees and contractors and ensure that they understand the different liabilities and responsibilities involved – for example, the consequent rights to annual leave for the employee, and the employer’s obligations with regard to tax, payroll tax, superannuation and workers compensation.

    In many cases, the distinction is clear. An electrician who is engaged by a property developer to rewire the office premises is not an employee. That situation might change if, for example, the electrician was taken on to provide the developer with in-house, ongoing services over a period of time, and on a consistent basis.

    The distinction is also important in the event that a business fails, and a liquidator is appointed to wind up the company. The Fair Entitlements Guarantee (FEG) and liquidators acting on its behalf must determine the status of any person engaged by the company at the time it failed. They must be able to distinguish between contractors, employees, and directors; this is essential for determining the allocation of funds and assets and what they are able to claim. In cases where it is not factually clear, the people concerned can attempt to substantiate their status within the business, which might have been unclear for some time.

    Under the Corporations Act, employee claims are given priority; but contractors have no priority.  In addition, under the FEG, the government pays financial assistance to employees where there are insufficient company assets remaining to meet their claims. The FEG does not provide any assistance to contractors.

    Example 1: Employee or contractor?

    There are instances where a person that was initially engaged on a contractual basis can, in effect, be deemed an employee over time with its attendant liabilities (eg annual leave, LSL). Recently, however, FEG rejected a person’s claim to be an employee, even though at the time the company failed, he had been engaged by the company for some time.  There was no written employment contract, no tax or superannuation had been paid, and there was no other sufficient evidence that he ever was an employee. His lodgement of tax returns, as evidence in support of his claim to be an employee, was rejected; he had only lodged them when the company’s problems became apparent, and his statement was found to be “self-serving”.  A tribunal review upheld FEG’s decision.

    Example 2: Manager, director or de facto director?

    Further complications can arise, particularly when an employee is also a director of the company. As illustrated in this recent article, FEG does not pay employees who are also directors of a company in liquidation.

    In the case mentioned in the above article, although the person was not formally appointed as a director, he was found to be a de facto director on the evidence that he commonly performed director-related tasks and “held himself out as a director”.

    He had started on a casual basis but, over time he managed the business’ cash flow and finances, and its staff and clients. He developed the business over time without supervision. It was relevant that he had signed numerous credit applications as a director, and he gave a director’s guarantee for credit given.

    Action Points to consider: 

    1. Employment status should be clearly documented, and its terms adhered to; any changes should be agreed and formally recorded. Companies need to be clear about working arrangements – e.g. casuals should be clearly employed as casuals, not as quasi-employees.
    2. Businesses should schedule regular reviews of their staffing situation, particularly for those staff whose status is not clear.
    3. It is, of course, necessary to ensure that all tax and superannuation payments are made on behalf of employees.
    4. It is vital that employees’ contracts reflect their situation; records should be kept up to date and checked to determine whether tax is being withheld.
    5. For all persons engaged by the company, there should be written contracts or evidence in support of their status.

    Attention to these points will provide a level of clarity in relation to what is a significant relationship and will protect both business owners and the individuals concerned. They also have important implications for the way in which businesses engage the people they need to carry on their enterprise.

    For businesses, individuals, and for business advisors, the key lesson here is that:
    if any contractor is deemed an employee, any employee payments made are deemed wages and are then grossed up for PAYG and superannuation.  So, if you pay a contractor $100 (depending on total payments and relevant tax rates), this payment could be grossed up to $220 to include PAYG and superannuation.  Further, the grossed-up totals would then be used to calculate payroll tax and workers compensation insurance liabilities.  In effect, extending the payment of $100 to a further liability of another $132 for the $100 paid.

    That person may also then have a claim for unpaid holiday and long service leave entitlements.  This needs to be considered where contractor payments are significant, as such latent liabilities can easily render a company insolvent.  This is especially a problem in such businesses using contracting labour such as security companies, cleaning companies, building companies and some labour companies.

    An example of this is a current decision made by the Fair Work Commission in regards to the high profile Foodora Australia Pty Ltd case.  We will be providing an update of the possible appeal for this case and will address it in a future article.

    Support is available: 

    Sandra Parker, newly appointed Fair Work Ombudsman (FWO), says her office will continue to help small businesses navigate their way through what can be a difficult area, via the FWO small business helpline and by sending teams into targeted areas to listen to their problems and provide assistance.  See this article for more information.

    Should you require assistance for your particular business, please contact Riad Tayeh from dVT Group on 02 9633 333 or email mail@dvtgroup.com.au.

    READ MORE
  • CP East Pty Limited (Administrators Appointed) ACN 603 493 536

    Creditor Reports12/11/2018

    On 20 August 2018, Riad Tayeh and Suelen McCallum were appointed Joint & Several Voluntary Administrators of CP East Pty Limited (ACN 603 493 536). The Administrators now provide a Supplementary Report to Creditors.

    By proceeding to view information about CP East Pty Limited, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find a report to creditors available here  CREDITOR REPORT

    If you believe you are a creditor of the company or if you hold information which may assist the administrator in their investigations into the affairs of the company, please do not hesitate to contact Troy Graham of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    READ MORE
  • The Voice of the Customer: Are you Listening?

    Business Strategy Articles24/10/2018

    Customer satisfaction has always been crucial to the success of a business.  However, the key is to prioritise to ensure you are listening to the right customer and then quantify and use the feedback to help attract more customers like them.  

    Smart businesses owners know that the success, or even the survival, of a business depends on its ability to outperform its competitors in the world of customer relations.

    The key to your success lies in your capacity to listen to your customers, capture and analyse the data they provide and improve their experience of what you have to offer.

    What is VOC?

    VOC is the ‘voice of the customer’ – a process you can’t afford to ignore.  It involves listening to customer’s needs and wants, expectations and preferences with regard to the product or services your business offers.

    This data is captured through two types of feedback.

    Solicited VOC is the information you actively seek from customers; it is often more productive as you can ask for positive and negative feedback.

    Unsolicited VOC is feedback that customers provide without being prompted or asked; it tends to be geared more towards negative comments and complaints.

    Businesses must listen to both types. Each offers valuable insights into how various customers view the business and express their experience of it. It is important to maintain a record of customer feedback – both positive and negative – so as to identify trends and pinpoint key problem areas in need of attention.

    At dVT Strategy, we help clients with this important process as part of the overall business plan, by translating this information into meaningful objectives, which will close the gap between what customers expect and what your business delivers.

    Whose Voice Do You Hear?

    Businesses seeking to create new growth are faced with a dilemma. Which customers should they listen to?

    Many businesses hear their most vocal customers – usually because their listening is tuned in to the loudest voices. But are they listening to the right customers?

    Is it better to continue to hear the voices of those who are not being served well or even those who are not being served at all?  Or is it wiser to listen carefully to the best and most loyal customers?

    When you answer these questions, remember the well-established 80:20 rule. If 80% of your business revenue comes from the 20% of customers who regularly purchase your products or services, then they should have your attention. They are essential to your business success. Theirs are the voices you should be listening to.

    Selective Listening: Not All Voices Are Equal

    To help you prioritise your listening, use this simple method to classify your customers. Rank them as either A, B or C – based on the following criteria:

    A = High-value customers, who will most likely bring future business

    B = Mid-value customers, with some potential for future business

    C = Low-value customers, who are likely to be irregular or ‘one-off’  

     This differentiates your customers and guides you in terms of how you treat their feedback.  What you might hear from a C-class customer should not be regarded in the same way as feedback from an A-class customer. Your businesses should invest more time in your high ranking customers. They are more profitable, and they take up less time and effort to maintain. The voices of these customers should not merely be heard, but really listened to.

    Use VOC To Drive Your Business

    When you listen to the right customer voices, your business can benefit from their opinions and feedback. You can use this knowledge to:

    • Make alterations or improvements to your products or services
    • Make changes to your business and how it is conducted
    • Determine your position in the market
    • Understand the attitudes, interests and values of your target audience
    • Develop more relevant marketing content
    • Prepare a Business Value, Vision and Mission Statement that includes qualities your customers’ value
    • Identify your Unique Selling Proposition
    • Plan for the future

    At dVT Strategy, we take clients through VOC and customer classification exercises. As a result, they are equipped with data that helps them bridge any existing gaps between their current offerings and what their best customers expect from them.

    Listening to the needs of your customers and their experience is not an optional exercise. Listening to the customers is a valuable investment of your time. Their voices provide the real, instant and quantifiable feedback to help you attract more customers like them – the customers you really want.

    If you or someone you know would like to have a chat about your business and how you can ensure you are capitalising on VOC, please contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email Brendan@dvtgroup.com.au.

    READ MORE
  • A Culture of Accountability: Who’s Responsible?

    Business Strategy Articles09/10/2018

    Accountability is vital to the success of any business. Business leaders must take the initiative in creating, developing and sustaining a culture of accountability. Here are some strategies that will help.

    All business owners want their businesses to succeed. Success is only possible in an environment where people accept their responsibilities and deliver on their commitments – within a carefully nurtured culture of accountability.

    What is accountability?

    Accountability is more than just accepting responsibility when mistakes occur. It’s about actively taking on responsibility, following it through, and getting things done. It’s also about recognising that all employees, and departments, have responsibilities of their own, and are all inter-dependent.

    Accountability matters. Without it, no one can be held responsible. In a culture of accountability, people accept and value responsibility, and understand it involves a certain degree of autonomy. Accountability helps create an environment that enables individuals and the business as a whole to be proactive and seek ways for improvement.

    Accountability is catching

    They say culture is ‘caught not taught’. Accountability starts with the leaders of a business. If leadership is not accountable or tolerates a lack of accountability in others, the deficiency progressively affects the entire organisation. Left untreated, this situation undermines any sense of clarity about who is responsible for what. Employees who are not clear about their responsibilities, or not held accountable for outcomes will ultimately have a negative impact on the overall success of a business.

    5 steps to encourage accountability

    To prevent the deterioration of accountability in the workplace, we have found that business leaders should:

    1. Set clear expectations: It is imperative that leaders are clear about expectations and outcomes, about how people can go about achieving objectives, and how success will be measured. Setting goals, KPIs and deliverables that are in line with the business’s values, vision and mission, will motivate employees to achieve targets
    2. Provide resources: If employees are to be accountable, they must have the skills and resources necessary to do what is expected of them. Without them, they are likely to fail. Effective training plans and development programs can provide employees with the right support to help them meet expectations.
    3. Monitor progress: Employees need to work through a series of milestones – clear and measurable targets with an agreed timeline and budget to achieve them. If they fall behind or lose sight of a target, the problem should be addressed right away, and solutions found to make sure employees can get back on track.
    4. Give clear, honest feedback: Feedback from leaders is imperative. If there are clear expectations, capabilities and measurement tools, then feedback can be factual and evidence-based, and communication is made easier.
    5. Establish consequences: If from the start, there is a clear understanding about expectations, and all essential resources have been provided, leaders can be sure they have done what is needed to support their employees’ performance. They should recognise and reward the achievement of results and celebrate employees’ successes. If, on the other hand, employees do not perform as required, there might be gaps in understanding or perception about what was expected; this should be talked through. Employees who continue to fail might require performance management, or might eventually exit the organisation.

    All of these measures will help to improve the success of the business, but the leader’s own example is crucial.

    Accountability starts at the top

    Where leaders act without accountability, employees will follow. The leaders of a business are its foundation, so it is vital that they display the characteristics they desire from their employees. A business underpinned by strong values and a culture of accountability will flourish, and create an environment that performs well.

    Seek expert help

    Creating a culture of accountability is not easy to do. At dVT Strategy, we have helped several business owners to put accountability back into the business.

    We work with leaders and their employees to develop clear expectations and set achievable goals, through the development of KPIs and targets. We also provide leaders with tools for skills analysis, so they can ensure all staff have what they need to succeed in their roles.

    As a result, we have seen improved performances in our clients’ businesses as their employees take responsibility for outcomes and find solutions to address challenges. Due to improved performance, clients have also enjoyed increased financial returns.

    If you improve a leader’s accountability, you generate a small improvement in business. If through increased accountability, you can improve the performance of everyone in the organisation, you generate a significant improvement in business.

    If you are struggling with a lack of accountability in your business, or you know someone who is, there is expert help available. For assistance in creating a culture of accountability, contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email brendan@dvtgroup.com.au.

    READ MORE
  • A Culture of Accountability: Who’s Responsible?

    News Articles

    Accountability is vital to the success of any business. Business leaders must take the initiative in creating, developing and sustaining a culture of accountability. Here are some strategies that will help.

    All business owners want their businesses to succeed. Success is only possible in an environment where people accept their responsibilities and deliver on their commitments – within a carefully nurtured culture of accountability.

    What is accountability?

    Accountability is more than just accepting responsibility when mistakes occur. It’s about actively taking on responsibility, following it through, and getting things done. It’s also about recognising that all employees, and departments, have responsibilities of their own, and are all inter-dependent.

    Accountability matters. Without it, no one can be held responsible. In a culture of accountability, people accept and value responsibility, and understand it involves a certain degree of autonomy. Accountability helps create an environment that enables individuals and the business as a whole to be proactive and seek ways for improvement.

    Accountability is catching

    They say culture is ‘caught not taught’. Accountability starts with the leaders of a business. If leadership is not accountable or tolerates a lack of accountability in others, the deficiency progressively affects the entire organisation. Left untreated, this situation undermines any sense of clarity about who is responsible for what. Employees who are not clear about their responsibilities, or not held accountable for outcomes will ultimately have a negative impact on the overall success of a business.

    5 steps to encourage accountability

    To prevent the deterioration of accountability in the workplace, we have found that business leaders should:

    1. Set clear expectations: It is imperative that leaders are clear about expectations and outcomes, about how people can go about achieving objectives, and how success will be measured. Setting goals, KPIs and deliverables that are in line with the business’s values, vision and mission, will motivate employees to achieve targets
    2. Provide resources: If employees are to be accountable, they must have the skills and resources necessary to do what is expected of them. Without them, they are likely to fail. Effective training plans and development programs can provide employees with the right support to help them meet expectations.
    3. Monitor progress: Employees need to work through a series of milestones – clear and measurable targets with an agreed timeline and budget to achieve them. If they fall behind or lose sight of a target, the problem should be addressed right away, and solutions found to make sure employees can get back on track.
    4. Give clear, honest feedback: Feedback from leaders is imperative. If there are clear expectations, capabilities and measurement tools, then feedback can be factual and evidence-based, and communication is made easier.
    5. Establish consequences: If from the start, there is a clear understanding about expectations, and all essential resources have been provided, leaders can be sure they have done what is needed to support their employees’ performance. They should recognise and reward the achievement of results and celebrate employees’ successes. If, on the other hand, employees do not perform as required, there might be gaps in understanding or perception about what was expected; this should be talked through. Employees who continue to fail might require performance management, or might eventually exit the organisation.

    All of these measures will help to improve the success of the business, but the leader’s own example is crucial.

    Accountability starts at the top

    Where leaders act without accountability, employees will follow. The leaders of a business are its foundation, so it is vital that they display the characteristics they desire from their employees. A business underpinned by strong values and a culture of accountability will flourish, and create an environment that performs well.

    Seek expert help

    Creating a culture of accountability is not easy to do. At dVT Strategy, we have helped several business owners to put accountability back into the business.

    We work with leaders and their employees to develop clear expectations and set achievable goals, through the development of KPIs and targets. We also provide leaders with tools for skills analysis, so they can ensure all staff have what they need to succeed in their roles.

    As a result, we have seen improved performances in our clients’ businesses as their employees take responsibility for outcomes and find solutions to address challenges. Due to improved performance, clients have also enjoyed increased financial returns.

    If you improve a leader’s accountability, you generate a small improvement in business. If through increased accountability, you can improve the performance of everyone in the organisation, you generate a significant improvement in business.

    If you are struggling with a lack of accountability in your business, or you know someone who is, there is expert help available. For assistance in creating a culture of accountability, contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email brendan@dvtgroup.com.au.

    READ MORE
  • Complex CARBS: The Changing Dynamics of the Food Business

    News Articles

    The emergence of new technologies, online ordering and food delivery have been mixed blessings for cafes and restaurants. The industry is re-examining the ‘menu of services’ it offers to meet the demands of an unpredictable customer base. 

    Where would we be without CARBs? We’re talking about Café And Restaurant Businesses, of course.  They address a basic human need for sustenance – food.  And they also satisfy our higher order desires for social interaction and multi-sensory physical pleasure.

    Not surprising, then, that according to the Australian Bureau of Statistics’ tracking data, CARB has been the fastest growing retail sector in Australia over the last 10 years. Equally unsurprising, given the required high standards, and the intense levels of competition, to please a fickle dining public, it can be a very difficult industry and one that requires great attention to detail and deft financial management.

    Many CARBs are taking advantage of new technologies, to introduce a range of new offerings, such as online ordering and meal delivery, including third-party services like Menu Log and Uber Eats.  On the surface, these new enablers appear to provide opportunities and give the sector cause for optimism, but there’s a note of caution. How can CARBs exploit the advantages of adopting these technologies, while avoiding a number of unintended consequences for their core business?

    The CARB Business Model

    The traditional business model for CARBs is a high service model with labour accounting for the largest cost. Serving multiple course meals, add-ons and alcohol (provided the relevant licence is obtained) has allowed successful operators to cover the costs of doing business by maximising the docket and margins, and using pickups and takeaways as top-up revenue sources and an opportunity to convert sampling to visiting. Although alcohol licenses and requirements involve some costs, these are more than adequately covered by the high mark-ups in this model.

    The On-line Delivery Service Model

    The new technology that has enabled electronic meal ordering and home delivery services potentially provide restaurants and café operators with access to a new set of customers – those who want a variety of meal options with the convenience of straight-to-the-door delivery. This might result in a higher number of meals sold, resulting in greater volume moving through the capital-intense kitchen facilities and, therefore, higher gross revenue.

    Adopting this model, however, has potential consequences that need to be considered:

    • Additional costs and lower margins: This model attracts the additional cost of the home delivery service provider, which the CARB must often meet
    • Reduced average ticket: Customers of home delivery services often ‘cherry-pick’ a menu, usually preferring main courses, and choosing to consume their own wine, coffee, and perhaps desserts.
    • Price comparisons: The model allows easy menu comparisons, which leads to price competition. This often has a downward impact on margins or a negative impact on regular customers, who ‘price compare’ their favourite CARB with new options.
    • Customer attrition: Intense competition adds a further threat: loyal and frequent customers might be enticed away by the ease of responding to another restaurant, or a pop-up offering another cuisine. Competition might mean customers who were regular visitors at a higher average docket can now pay less for their order.
    • Complications for the business model: These services are usually demanded on a fast turnaround. This can add complications to the kitchen model and result in a reduction of food quality and overall experience for dine-in patrons, and for home delivery ‘samplers’.

    The Changing Dynamics of the Market 

    There’s evidence that commercial, economic and other pressures are being brought to bear on what is already a volatile market.

    • CARBs are beginning to question the benefits of some new technologies and delivery services and there has already been a movement away from the use of third-party providers – for commercial reasons, and because of community concerns about these providers’ business and staffing models.
    • When economic times are tough and there are pressures on household discretionary spending, dining out, and ordering in, are often the first expenses to be rationalised. Latest consumer spending reports indicate that this is now having an effect.
    • Some CARBs are taking extraordinary steps in a desperate attempt to survive. Measures to ‘cut corners’ include reducing the quality of their raw materials, delaying payments to suppliers, failing to pay taxes, and underpaying their employees.

    These factors might well be linked to the noticeable increase in retail and restaurant liquidations over the last 12-18 months.

    The Fair Work Ombudsman’s recent food precincts report found that many food enterprises in selected streets in Sydney and Melbourne had failed basic compliance standards in everything from OH&S, food preparation and hygiene, wages, superannuation, taxes and more. We also see this non-compliance in the case of CARBs that go into liquidation or administration, which must be reported to ASIC for further action. There is no excuse or justification for CARBs failing to comply with the law; it also creates a situation of unfair competition for those who comply fully.

    In summary, CARBs operate in a finely tuned, and constantly evolving world in which customer preferences are continually shifting, according to their individual cost-benefit evaluations. Although a pool of potential new customers, revealed by the technological advances in home delivery services, reflects bright new benefits, it has darker depths. Like any modifications to current business operational models, this change, if adopted, needs to be integrated carefully and exploited creatively if it is to meet business goals.

    Although many third-party providers argue that operators in the CARB sector must adopt new technology and new service options or be left behind by their competitors, such a decision is not straightforward and no outcome – positive or negative – can be guaranteed.

    CARBs should keep a level head. When considering available options, they must weigh up the benefits and disadvantages for their particular situation, and adjust them to meet the demands of what can often be an unpredictable customer base.

    If you have a CARB, or know someone who has, and you have reason for concern, it is important to be proactive and obtain help early. This is one of dVT Group’s specialty industries, and we will be happy to have a no-obligation discussion with you, to determine what options are available

    If you would like to speak with someone about your particular situation, please call Antony Resnick at the dVT Group on 02 9633 3333 or email us at mail@dvtgroup.com.au

    READ MORE
  • SEI Carbide Australia – Jeff Drury

    Business Strategy Testimonials17/09/2018

    As we are all witnessing, business is changing at a rapid pace and with this comes the need for adaptation, innovation and key strategic thinking to ensure your company stays at the pointy end of your industry.

    SEI Carbide has been providing cutting tools and services in the manufacturing industry since 1973, which makes it a stable and reliable company in the industry. Even with this long term success, the business was starting to lose ground and needed a new path to ensure longevity and success in a demanding and shrinking market. At the beginning of 2013, the company went through a transitional change in management and the new management could see that without serious changes to the company’s short term and long term goals with a new vision and direction, they would continue to shrink in size.

    Management felt the most effective way to ensure these needs were implemented in the most efficient way was to seek external help and we did this in conjunction with dVT Strategy.

    From the onset, dVT Strategy was very professional, could understand our business and the industry we work in and from this appointed the most suitable person for our needs. Over the next 18 months, we worked through all levels of the business and then put these into a practical and logical strategy and then set about implementing this into the business.

    The result from this investment with dVT Strategy is that SEI Carbide has now seen 4 consecutive years of growth and from this we have been able to expand into other areas of the market. The one thing that we got the most out of dVT Strategy was their ability to understand the ideas and vision the new management had and be able to put this into a well laid out and effective plan.

     

    Jeff Drury
    SEI Carbide Australia

    READ MORE
  • CP East Pty Limited (Administrators Appointed) ACN 603 493 536

    Creditor Reports13/09/2018

    On 20 August 2018, Riad Tayeh and Suelen McCallum were appointed joint & several Voluntary Administrators of CP East Pty Limited (ACN 603 493 536).

    By proceeding to view information about CP East Pty Limited, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find a report to creditors available here  Creditor Report 13092018

    If you believe you are a creditor of the company or if you hold information which may assist the administrator in their investigations into the affairs of the company, please do not hesitate to contact Troy Graham of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    READ MORE
  • Brendan Ryan

    Business Strategy Team11/09/2018

    Brendan started his career as a research scientist in 1995 before moving into banking and finance whilst living and working in the UK. Upon returning to New Zealand, Brendan continued in banking joining the prestigious ANZ global leadership programme. Brendan then accepted a strategic role and was responsible for the implementation of one of his own projects. The runaway success of this project saw him implement the same project into the Australian market in 2002, again achieving considerable success.

    Brendan continued with ANZ in several roles including that of Manager of Operations for the Pacific Region. In 2011 Brendan undertook a career change and joined a large scientific consulting firm where he was responsible for restructuring the company. A year later he successfully established his own management consulting business.


    Brendan joined the dVT Group in 2014 as a consultant and in 2017 became Director of dVT Strategy helping business owners with strategies to improve and grow their business.

    Brendan’s hands on style sees him work with clients at their premises as and when it fits with the client’s schedule and budget.   He is easy to relate to and has the ability to speak your language.

    He places a major focus on the ability to deliver real outcomes.  This means the return on investment of a consulting engagement with Brendan can be substantial, as evidenced by results he has achieved for his existing client base.

    Brendan calls on his extensive network and out of the box thinking to provide real and tangible “value adds” usually well in excess of his fees.  His in depth knowledge of the available government services and grants are a perfect value adding approach with the majority of his client engagements being partially funded via government grants.

    Qualifications:

    • Master of Business Administration
    • Master of Science (Hons)
    • Diploma of Finance & Mortgage Broking

    Areas of Expertise:

    • Strategic Planning
    • Structuring and Asset Protection
    • Leadership and HR
    • Marketing and Business Development
    • Process Mapping/Process Improvement
    • Succession Planning
    • Mergers and Acquisitions
    • Funding
    • Government Grants
    • Business Sale
      – Trade Sale
      –  Management Buyout
      –  Roll-ups
    • Ongoing advisory and board positions
    READ MORE
  • Erin Garlick

    Business Strategy Team

    Employing her practical and theoretical knowledge, Erin works alongside senior dVT Strategy staff in undertaking business analysis and strategic reporting for clients. She helps SME business owners to address their challenges and identify opportunities to leverage for growth and improvement.

    Working across a range of industries, Erin is a specialist in government grants for business. She has built her expert knowledge around understanding which grants are best-suited to which types of businesses and how businesses can best meet the eligibility requirements in order to successfully obtain grants.

    Erin works with dVT Strategy clients to complete the often-complicated grant paperwork and application to deliver the best possible outcome. Understanding that no two businesses are ever the same, Erin applies her analytical skills and technical knowledge to help compile reports and deliver recommendations.

    Erin is an excellent problem solver and looks forward to becoming a certified practitioner of the Myers-Briggs Type Indicator®. MBTI is a proven tool that can help identify personality traits and use these individual personality preferences to grow and develop staff and managers in a business setting.

    Qualifications:

    Erin holds a Bachelor of Business and Commerce from Western Sydney University and plans to enter further study in her Master of Business Administration.

    Areas of Expertise:

    • Strategic Planning and Analysis
    • Succession Planning
    • Process Mapping and Improvement
    • Sales, Marketing & HR Planning
    • Government grants

     

    READ MORE
  • The Voice of the Customer: Are You Listening?

    News Articles17/08/2018

    Customer satisfaction has always been crucial to the success of a business.  However, the key is to prioritise to ensure you are listening to the right customer and then quantify and use the feedback to help attract more customers like them.  

    Smart businesses owners know that the success, or even the survival, of a business depends on its ability to outperform its competitors in the world of customer relations.

    The key to your success lies in your capacity to listen to your customers, capture and analyse the data they provide and improve their experience of what you have to offer.

    What is VOC?

    VOC is the ‘voice of the customer’ – a process you can’t afford to ignore.  It involves listening to customer’s needs and wants, expectations and preferences with regard to the product or services your business offers.

    This data is captured through two types of feedback.

    Solicited VOC is the information you actively seek from customers; it is often more productive as you can ask for positive and negative feedback.

    Unsolicited VOC is feedback that customers provide without being prompted or asked; it tends to be geared more towards negative comments and complaints.

    Businesses must listen to both types. Each offers valuable insights into how various customers view the business and express their experience of it. It is important to maintain a record of customer feedback – both positive and negative – so as to identify trends and pinpoint key problem areas in need of attention.

    At dVT Strategy, we help clients with this important process as part of the overall business plan, by translating this information into meaningful objectives, which will close the gap between what customers expect and what your business delivers.

    Whose Voice Do You Hear?

    Businesses seeking to create new growth are faced with a dilemma. Which customers should they listen to?

    Many businesses hear their most vocal customers – usually because their listening is tuned in to the loudest voices. But are they listening to the right customers?

    Is it better to continue to hear the voices of those who are not being served well or even those who are not being served at all?  Or is it wiser to listen carefully to the best and most loyal customers?

    When you answer these questions, remember the well-established 80:20 rule. If 80% of your business revenue comes from the 20% of customers who regularly purchase your products or services, then they should have your attention. They are essential to your business success. Theirs are the voices you should be listening to.

    Selective Listening: Not All Voices Are Equal

    To help you prioritise your listening, use this simple method to classify your customers. Rank them as either A, B or C – based on the following criteria:

    A = High-value customers, who will most likely bring future business

    B = Mid-value customers, with some potential for future business

    C = Low-value customers, who are likely to be irregular or ‘one-off’  

     This differentiates your customers and guides you in terms of how you treat their feedback.  What you might hear from a C-class customer should not be regarded in the same way as feedback from an A-class customer. Your businesses should invest more time in your high ranking customers. They are more profitable, and they take up less time and effort to maintain. The voices of these customers should not merely be heard, but really listened to.

    Use VOC To Drive Your Business

    When you listen to the right customer voices, your business can benefit from their opinions and feedback. You can use this knowledge to:

    • Make alterations or improvements to your products or services
    • Make changes to your business and how it is conducted
    • Determine your position in the market
    • Understand the attitudes, interests and values of your target audience
    • Develop more relevant marketing content
    • Prepare a Business Value, Vision and Mission Statement that includes qualities your customers’ value
    • Identify your Unique Selling Proposition
    • Plan for the future

    At dVT Strategy, we take clients through VOC and customer classification exercises. As a result, they are equipped with data that helps them bridge any existing gaps between their current offerings and what their best customers expect from them.

    Listening to the needs of your customers and their experience is not an optional exercise. Listening to the customers is a valuable investment of your time. Their voices provide the real, instant and quantifiable feedback to help you attract more customers like them – the customers you really want.

    If you or someone you know would like to have a chat about your business and how you can ensure you are capitalising on VOC, please contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email Brendan@dvtgroup.com.au.

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  • Do Bankruptcy and Debt Outlive You?

    News Articles

    Have you ever stopped to consider what would happen if you died bankrupt?  Obtain a general understanding of the different situations and how you may avoid placing an unnecessary burden on family and friends. 

    Like most of us, at some point, you will give serious consideration to making end-of-life arrangements.

    When you prepare your Will, for instance, you will probably appoint an Executor to manage the affairs of your estate. The Executor’s job is to identify and value your assets and sell them (if required), pay the debts of the deceased person and the expenses incurred by the Executor, then make a distribution to your beneficiaries in accordance with your Will.

    Seems straightforward.   But have you ever stopped to consider what would happen if you died bankrupt, or before paying all your debts?

    Many people avoid the question; others come to us looking for answers. We believe it’s important you have a general understanding of the situation, as a starting point.

    Consider these scenarios:

    1. Bankruptcy

    If a bankrupt person dies before being discharged from bankruptcy, section 63 of the Bankruptcy Act 1966  (‘the Act’) provides that the administration of the bankrupt estate is to continue, so far as it is capable of being continued, as if the bankrupt person were still alive.

    If a bankrupt has been named as a beneficiary in the Will of a living person (the benefactor), and is still bankrupt when the benefactor dies, any property (e.g. house, money) that is part of the bankrupt’s interest in the deceased estate becomes an asset in the beneficiary’s bankrupt estate. If the bequest to the bankrupt is in the form of income (dividends on shares, interest on term deposits, etc.) then, for a certain time period, the amount received by the bankrupt beneficiary during the period of bankruptcy, is added to any normal income when the trustee assesses liability for income contributions.

    If the bankrupt is granted a ‘life tenancy’ of a property owned by the benefactor, the right to occupy the property is not an asset in the beneficiary’s bankrupt estate. The rental value of the property, however, is likewise added to any normal income when the trustee assesses liability for income contributions.

    A benefactor is able to add a provision to a Will, stating that if the beneficiary is an undischarged bankrupt at the time of the benefactor’s death, then the original beneficiary’s entitlement will go to another beneficiary.

    2. Insolvency and the Administration Order

    In this scenario, there are three possibilities:

    1. The Executor of a debtor’s deceased estate ascertains that the deceased estate is insolvent, which mean the debts owed by the deceased at the date of death are greater than the assets in the estate. The Executor can make an application to the Court that the deceased estate be administered by a trustee under Part X1 of the Act.
    2. A creditor is owed money by a deceased debtor. The creditor presents a Creditor’s Petition to the Court for an order that the deceased estate be administered by a trustee under Part X1 of the Act.
    3. A creditor is owed money by a debtor. The creditor presents a Creditor’s Petition to the Court, which is an application to have the debtor made bankrupt by way of a Sequestration Order. The debtor dies, before the Court makes a Sequestration Order, the Court can still proceed to make an order that the deceased estate be administered by a trustee under Part X1 of the Act.

    In these cases, the Federal Court or Federal Circuit Court can make an order, under Part XI of the Act, that the debtor’s deceased estate be administered by either a Registered Trustee or the Official Trustee, instead of by the Executor. This is generally known as an ‘Administration Order’.

    ‘Claw-back’ provisions, with certain modifications, apply to Part XI administrations. These enable the trustee to recover preference payments, under-value transfers of property, and transfers of property to defeat creditors carried out by the debtor prior to the death.

    The Trustee’s Role

    The trustee’s administration of the deceased estate generally involves the following tasks:

    • Investigating the financial affairs of the deceased debtor
    • Obtaining a Grant of Probate, if applicable
    • Identifying the assets that can be sold for the benefit of creditors
    • Selling those assets
    • Taking recovery action in respect of preference payments, under-value transfers and property transfers to defeat creditors (if applicable)
    • Determining the claims of creditors
    • Paying a dividend to the proven creditors

    Paying of surplus funds to the Executor for distribution to the named beneficiaries in the Will of the deceased debtor. Clearly, the beneficiaries do not receive anything until such time as the creditors and the trustee’s remuneration and expenses have been paid in full.

    What Happens to an Estate under an Administration Order?

    The administration of the deceased estate by the trustee is similar to the administration of a bankrupt’s estate, but there are some obvious differences:

    • The income contribution regime does not apply; neither are ‘household property’ and a ‘necessary means of transport’ exempt from property divisible amongst creditors.

    For example, if the Will made provision for a specific bequest to a beneficiary of a house or a motor vehicle, the beneficiary would not receive them. The trustee would sell them to obtain                   funds to pay the creditors of the deceased estate.

    • If the deceased debtor had life insurance policy and/or superannuation, the payments from the insurer and/or superannuation fund would not normally be paid to the trustee. This is because the insurance policy would include a provision that, on the death of the insured, the payment would be made to a named beneficiary, such as a spouse, partner or relative. Superannuation includes similar provisions.

    And so the questions are answered. Bankruptcy continues beyond the grave, and debt doesn’t die when you do.

    You can prevent these problems with careful preparation. Structure separate accounts, and make provision for payment of debt. Stay in control of your financial obligations wherever possible and seek advice when you need it. In that way, you will avoid placing an unnecessary burden on family and friends and leave them the legacy you would wish.

    If you would like to speak to someone regarding your particular situation, please call dVT Group on 02 9633 3333 or email mail@dvtgroup.com.au.

     

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  • When a business starts to fail – the new law affecting companies, suppliers and advisors!

    News Articles

    A long overdue reform on the operation of IPSO Facto Clauses to increase the chances of companies facing difficulty to either return to successful future operations or to improve returns for all involved in the event of an insolvency event!

    Running a business is hard at the best of times, what with keeping customers happy and staff and suppliers paid. Keeping a business running when it enters a dangerous financial stage – insolvency – is harder still!  Skilled administrators are often needed to assess the business and try to keep it going and maintain its goodwill. This is often for two purposes – either to turn the fortunes of the business around and restore its profitability, or if that is not possible, to sell the business for a reasonable price as a ‘going-concern’.

    What often occurs in that precarious insolvency scenario is that suppliers opt out of their supply contracts, either because they are fearful they won’t be paid, or because they want to get out of the contract anyway.  Up until now, they could rely on what are called ‘ipso facto’ clauses found in most contracts – meaning the contact can be ended ‘for the reason only’ that the company enters insolvency.

    What is it?

    In the insolvency context, an ipso facto clause is a clause in a contract that allows one party to terminate or modify the operation of the contract upon if the other party enters insolvency, for example, liquidation or voluntary administration. These clauses are used to provide some risk protection for a party against an insolvent customer.  The flip side to this is that it can create difficulty for that customer in trying to turn around its fortunes, if the underlying agreement on which its business is based is terminated.  This can result in irreparable damage to the value of a business which may require key contracts to continue to operate, and can also undermine the ability to restructure, turn around or sell (as a going concern) a business within a formal insolvency process.

    Despite the efforts of a voluntary administrator, there may be not much left at all resulting in creditors getting nothing and what might have been a potentially successful line of new business, is lost to the economy.

    New Law Reform:

    Law reforms that commenced on 1 July 2018 now assist administrators in these scenarios. If directors act early enough to call in a voluntary administrator to their company, the law prevents suppliers from relying on ipso facto clauses to end their supply contracts.  Of course, the suppliers must continue to be paid, through the administrator, and it can often be in their interests to do so.  The company’s business might be restored by the administrator, or sold to another operator, and suppliers retaining that client, despite its difficulties, may prove to be worthwhile in the longer term.

    Who does it affect?

    The changes are relevant to any company going through voluntary administration, scheme of arrangement, deed of company arrangement or receivership, that is dependent on contractual agreements for its livelihood, and where those contracts have ipso facto clauses.  These clauses are often found in contracts of service-based businesses whose values are based more on their various contracts than on their physical assets.

    The changes apply to all new contracts, agreements and arrangements between parties entered into after 1 July 2018, so the law is not retrospective. This is one serious impediment for an administrator and at the same time a bonus for those who have such clauses in their pre-existing and on-going contracts.

    The triggers for the new law:

    The protection for a struggling business extends beyond the appointment of an insolvency administrator. Ipso rights are now unenforceable against the counterparty if they arise for the reason of:

    • a change in the credit rating of the counterparty;
    • a breach of financial covenants such as net tangible assets or debt to equity ratios;
    • a change of control or material adverse effect based on the counterparty’s financial position; or
    • subject to court order, termination for convenience based on the counterparty’s financial position.

    Otherwise, the stay against enforcing rights of termination will not affect most of the other rights being enforced, in particular, those based upon a failure to meet payment obligations, provided that they are not prevented in some other way under the particular terms of the new law.

    Exceptions:

    There are many and legitimate exceptions to the stay being imposed; for example, a lender does not have to continue providing a loan facility. Other exceptions are focused on particular industries such as certain maritime contracts and defence and security related services. Others are more broad-ranging and include:

    • Arrangements for the sale of a business;
    • Supply of goods or services relating to hospitals or public health services; and
    • Government licences or permits.

    The suppliers’ perspective:

    As for the suppliers, their position is protected because the administrator must have funds to be able to continue to pay the supplier, otherwise, the supplier may still terminate the contract for non-payment.  Involuntary administration, suppliers also have some protection in the form of the statutory personal liability of the administrators.

    At a practical level, it should be noted that there are cases where a supplier does not wish to rely on its ipso facto rights, upon an assurance from the administrator that the supplier will continue to be paid; and there are also those cases where the administrator decides that the supplies are not in fact necessary for the business and accepts the ending of the supply contract.

    Summary:

    This reform is long overdue for companies that are genuinely needing to go through a restructuring process which may trigger an ipso facto clause.  At the same time, the law tries to balance that with the rights of suppliers, whose on-going rights to payment are preserved. Given the limits and exception to the new law, it is important for both parties to a contract to understand the new law so as to avoid unnecessary disputes.

    From an administrator’s (and the company’s) perspective, the ability to continue contracts, properly monitored, will likely result in improved returns for creditors and improved likelihood of success in the future operations of the business. At the very least, it should allow the administrator some breathing space to be able to assess the viability of any contract and determine whether it is in the best interests of all parties to continue with it.  Indeed, there may even be a heightened perception that the administrator has more of a position of authority in regard to the contracts now that the legislation has come into force, and that may affect the outcome of negotiations.

    Either way, the impact of the legislation will be dependent on the ability of each party to successfully and commercially negotiate the arrangements under the contract.

    If you or someone you know would like assistance in relation to any of the above, please call dVT Group on 02 9633 3333 or email mail@dvtgroup.com.au.

     

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  • Goodbye to trading names from ABN Lookup!

    News Articles

    Read about the changes when using ABN Lookup and how best to register business names after 1 November 2018.

    ABN Lookup is the public view of the Australian Business Register (ABR). It provides access to publicly available information supplied by businesses when they register for an
    Australian Business Number (ABN).

    Presently, ABN Lookup displays all trading names associated with an ABN. However, work is currently in progress to retire trading names from the ABN Lookup.

    From 1 November 2018, ABN Lookup will stop displaying trading names and will only display the registered business names.

    If a business wishes to continue operating under a different name to their legal name, they will need to register their business name with the Australian Securities and Investments Commission (ASIC).

    What is the impact?

    If professional advisors continue to use an enterprise that uses a trading name, the companies that we do business with, or could potentially do business with, will no longer be able to use the ABN Lookup functionality to verify your identity or GST registration status.

    They will only see an entity’s legal name or business name registered with ASIC.

    What can be done?

    1. You will need to consider registering your trading name as a business name with ASIC.  Once a business name has been successfully registered with ASIC, it will then display on the ABN Lookup;
    2. You should also advise your clients, being companies who use a trading name rather than a legal name, to register for a business name with the ASIC.

    This link can be used:   http://asic.gov.au/for-business/registering-a-business-name/

    What are the costs?

    The costs associated with registering a business name are:

    $35 for one year;
    $82 for three years.

     

    We, dVT Group, believe that it is good practice to register a business name, since it provides evidence of ownership of that business name.

     If you would like help or advice regarding your business, please call dVT Group on 02 9633 3333 for a no-obligation discussion.    

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  • Allocating equity between siblings: entitlement vs reward!

    News Articles

    How do family companies allocate equity between siblings considering the work done in the company and their entitlement to a “hereditary” share of the company?

    At dVT Strategy, we have been working with several family companies around setting up their businesses for generational change. This has resulted in some very interesting family dynamics being highlighted.  The most interesting one being that of “entitlement versus reward”.

    Those working in the company rightfully want to be acknowledged and rewarded for sacrifices made and the skill they bring in having developed the business. Those siblings that may have been too young to contribute or were out working to help contribute to the family’s income whilst the company was being established may also be entitled to a valid claim.

    The younger ones would have endured times where their parents and siblings were simply not around.  Whilst those working and helping prop up the family finances would also feel a sense of loss of opportunity. How do you balance this against the siblings who worked on and in the business putting in extraordinary hours for little pay to build on a dream?

    Unfortunately, there is no hard and fast rule for resolving these issues.  They are very much emotional issues that need to be aired and properly handled through open and constructive discussions.

    Too often such discussions become toxic and lead to ill feeling between family members.  This is because internally the family is often unable to resolve all the issues confronting them as there is a feeling of bias and a hesitancy to openly discuss all the issues with other family members.

    One strategy that can help in these situations is for the family to use an experienced and trusted advisor to guide them through this delicate process.

    We, at dVT Strategy, have found that workshopping these issues with the ability to have breakout sessions for one on one discussions has proven to be a very effective way to reach a workable resolution.

    Further, to be successful, we have found it imperative that the partners and spouses of siblings are included in these workshops.  This avoids the frustration of spending time reaching an outcome that is accepted by all present, only to then have it undone when one of the participants talks to his partner or spouse and wants to restart the process.  This could result in much animosity and could make the process even more difficult to conclude satisfactorily.

    Once an agreement has been reached, it is imperative that a shareholders/participant agreement is drafted and executed by those involved.  This formalises the process and allows the emotions to be parked and all the participants can then get on with their respective roles in the knowledge that their position has been clarified and rules have been set.

    In completing the process, the need for ensuring “entitlement versus reward” is extremely important.  As if it is skewed one way or the other, it could seriously impinge on the continued operation of the enterprise.  So, the agreement becomes a way forward as much as a reflection of the past.

    If you would like help or advice, give Riad Tayeh from dVT Strategy a call on 02 9633 3333 to have a chat about your family business. 

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  • Business Mentors: a secret weapon behind thriving businesses!

    News Articles

    We are all aware of the numerous challenges business owners face when running a business.  These challenges can be grouped into three key areas being:

    1. Having the skills and experience needed across every aspect of the business:
      Most businesses are started by people that have an idea, skill or passion for a particular product or service. Whilst they are often very good in their area, very few also understand or are highly proficient at HR, Operations, Finance and Sales & Marketing, which are basic requirements for every business owner to run a successful business.They often learn this knowledge and experience from first-hand situations, but this can be both costly and demanding for a business owner. Larger businesses will employ a large team of specialist managers who have the required skills in each of these specific areas, but for a smaller business who is yet to generate the profits to afford the large management team, this responsibility falls back onto the owner.
    1. Managing the business whilst dealing with personal conflicts, culture, and history;
      The second key challenge for a small business owner is that at some stage they are likely to need to make a choice between a sound business decision or maintaining a personal connection, which often occurs in small businesses who work with, employ, buy from or sell to family or friends.  Many times these personal relationships have been built up over many years and often a business owner continues with them despite knowing it is no longer the best outcome for their business. A perfect example of this is having a staff member in your business who has been there since the business started, however, they are not performing, are difficult to deal with or are causing issues, yet the owner continues to employ them through a sense of loyalty.
    1. Having the time to step out of the business and work on the business:
      The third key challenge for business owners relates to the old adage of “working on the business vs working in the business”. The daily pressures of getting work done, meeting deadlines and managing everything can take a toll on the efficiency of the business. It also means that there is not the time to identify the issues, (Refer the boiling frog syndrome) let alone focus on what can be done to improve performance.

    This all means that a business owner needs to work smarter, not harder and that they need to ensure they have the right support.  Having a business mentor and a network of trusted experts can help business owners with the advice and support to address the challenges in these three key areas.

    There is sometimes the perception that having a mentor means that a business is struggling and is looking to get back on track.  In reality, many thriving businesses use mentors as their secret weapon.

    So what is a mentor?

    A mentor is an experienced individual who employs their own knowledge and skills to help coach business owners through the challenges of running and growing a business.  They can provide experienced, challenging and non-biased advice that help make informed decisions for the business.  A mentor can also act in a similar way as an advisory board but at a one to one level that has the ability to be flexible in its approach.

    How can a mentor help?

    A mentor can make valuable contributions in these areas:

    • Identify issues within the business that may be impacting on overall performance
    • Provide direct assistance in solutions to remedy issues
    • Act as a sounding board for ideas and concerns & give thoughts on major business decisions
    • Coach the owner on how to achieve their own personal goals within the business environment and gain some sort of work-life balance
    • Setting goals, introducing new strategies and tracking process to ensure you understand how the business is tracking.
    • Assist with compiling a business plan
    • Drive performance and delivery of the business plan
    • Improve business sales and help you to find new opportunities
    • Provide linkages to other experts to assist in remedying issues

    The benefits of having a mentor will vary from business to business and will range from utilising their business knowledge and experience right through to evolving both professionally and individually. Success for your business cannot be accomplished without both you and the business performing effectively.

    Business mentors do come at a cost, but the cost to the business is only a fraction of employing a management team and represents a strong investment when you consider the financial return they can bring.  Business owners that get the most out of engaging with a mentor are ready for change and are committed to achieving strong results.  They also understand the effect that wasted time, money and valuable resources on ideas that may not be effective has on the business.

    At dVT Strategy, we act as mentors to all of our clients and coach them through any issues that they may encounter. We ensure that our clients are kept accountable to their goals and are regularly challenged on their progress. As a result, we have seen a number of our clients achieve goals they originally deemed unobtainable and as a result, have received and enjoyed increases in their financial return.

    If you or someone you know is worried about their business or would like to receive an objective view of how a business is performing; or are ready to take the business to the next level, contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email brendan@dvtgroup.com.au.

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  • Disrupting Bankruptcy? Change from three to one year period.

    News Articles

    The period of time during which a person remains bankrupt is being reduced from three years to one. But while most of the restrictions of being bankrupt will be removed after one year, some will remain; in particular the obligation to continue to pay contributions from income for the full three years. 

    The changes to the Bankruptcy Act[1] itself are quite minimal, with the main change being that Section 149 will refer to one year rather than three as being the minimum period of bankruptcy.

    Apart from the obligation to continue to pay contributions for the full three years, for practical reasons, after one year a person will no longer be in bankruptcy. Restrictions on overseas travel, on obtaining credit, on being a company director and on certain professional and other licenses will all be lifted.

    This change will most certainly happen and the aim of this information is to help advise and prepare clients for any implications.

    We should start by acknowledging that this change can be viewed as having some positives, such as:

    • Leaving a person in the constraints of bankruptcy for a full three-year period is out of kilter with modern approaches to unpaid debt;
    • Regulations of bankrupt persons, over a three-year period, involves a considerable cost to creditors and to the community. There are economic benefits in having them discharged after a shorter period, and allowing them to participate fully in economic life;
    • There is an undue stigma attached to bankruptcy, especially when seen in the context of unpaid debt in the corporate sphere, where directors are generally protected by their limited liability.

    Cause for concern?

    The proposed change has also raised concerns on two points connected with the reduction of the bankruptcy period:

    • If a bankrupt inherits property during their bankruptcy, it belongs to the Trustee. If the inheritance occurs after bankruptcy, the former bankrupt can keep it. With bankruptcy now only lasting one year, there may well be such windfalls in the second and third years that the creditors will miss out on.
    • Under the current law, bankrupts are required to pay contributions from their income for the full three years, if it is above a certain threshold (currently a minimum of around $56,674.80 for bankrupts without any dependants). Under the new law, despite that person’s bankruptcy ending after one year, they will still be required to pay those contributions for the remaining two years. The concern is that once a person is out of their bankruptcy, the Trustee will have less authority to enforce income contribution compliance over the following two years.  For example by way of various powers to enforce compliance, including to extend the period of bankruptcy by way of an ‘objection to discharge’.

    There are some additional provisions in the law to assist Trustees in enforcing payment:

    • A stronger requirement for discharged bankrupts to keep in touch with their Trustees by way of notifying any change in contact details. Any breach of that requirement involves a serious penalty;
    • The continuation of the supervised bank account regime, which can be used by Trustees to collect outstanding payments, even after discharge;
    • The requirement for former bankrupts to keep and provide, for the full three years, details recording their income, employment, financial transactions and other dealings.

    Accounting and tax advisers with clients who have been through bankruptcy should be particularly aware of this last requirement.

    The bankrupt estate

    The ‘bankrupt estate’ which the Trustee administers, is considered separately from the bankrupt person. It is important to point out that a Trustee has always been able to carry out investigations, asset recovery proceedings and the sale of assets after a bankrupt’s discharge within certain time frames. In the proposed amendments there is no change to the law in terms of the period of time by which an estate must be administered and finalised.

    How will the transition be made?

    The default one-year bankruptcy period will commence on a nominated day, which has yet to be announced. If we assume that it is 1 September 2018, on that day all bankruptcies then on foot for over one year, except those subject to an objection to discharge, will be discharged. Remaining bankruptcies will be discharged after one year.

    For this reason, there would be no point in delaying bankruptcy until the new law comes into effect. Whenever bankruptcy occurs, under the new law, it will be limited to a period of one year.

    In the future

    The changes in bankruptcy law will most certainly happen; Trustees and creditors must accept that. In the longer term, we consider that further changes will be necessary.  One possible change is to reduce the time period during which a debtor and/or bankrupt will be listed on credit rating agencies’ databases. The current period is generally five years, we suggest it should be reduced to three years.

    This change would assist the anticipated positive effects of one year bankruptcy to flow into the economy.

    Anyone being pursued by creditors, or contemplating bankruptcy should know that bankruptcy is not the only option. There are other avenues available under the law; including debt agreements under Part IX of the Bankruptcy Act, which is also subject to Government reform.

    In any case, the decision to declare bankruptcy is one that should never be made before seeking advice.

    If you would like advice or if you would just like to discuss any of the above, please call the dVT Group on 02 9633 3333.  

    [1] The Bill is before Parliament; this article is written on the assumption that it will become law.

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  • Business Valuations: putting the “value” in “valuations”

    News Articles

    There are a number of reasons why business valuations are done – maybe it’s the sale of a business or developing employee share option schemes.  It could be to resolve shareholder disputes or maybe to determine an appropriate market value for taxation purposes.

    Providing quality business valuations is a growing part of the services we provide at dVT Group and we have found that from time to time clients ask us “how can we use valuations to improve our business and the value of our business?”

    Our reply?  It’s all about the risk.  A key part of any valuation is assessing the risk of that business, and that impacts directly on the multiple that we use to crunch the final valuation numbers.  If a business is considered to have a number of risks, the multiple decreases, and this follows to impact on and decreases the business value.

    So the answer to improving business value is to decrease the overall risk of a business.  There are a number of ways in which business owners can make changes to achieve this, many of these should and do work hand in hand with each other.

    7 key factors that can help decrease the overall risk of a business are: 

    1. Consistency – by that we mean doing the business well and in the best manner at all times. You may not always be selling the same products or the same services, but you should always strive to conduct the business in the best manner at all times.  This in turn reduces the risk and uncertainty.
    2. Diversification – the highest risk is in a business that only does one thing or only has one major customer. That’s not to say that you have to be all things to all people and spread yourself too far.  The best way is to determine which customers and services provide you with the best profit margins and then concentrate your efforts on those.
    3. Processes and procedures – if you were selling your business, the purchaser would expect to be able to walk in the door on the first day, without you there, and take over the running of that business because you had all the systems, processes, customers etc, documented and able to be picked up by the new owners. That again decreases the risk because it demonstrates that all the knowledge about the business is not locked in the owner’s head!
    4. Planning and Reporting – this sort of goes with consistency; you should always have a current business plan that includes your marketing, products, staffing, financial and other goals and objectives and you should be using those plans on a regular basis. In other words, every month or quarter, reporting or summarising your results against expectations and understanding why those expectations were achieved or not.  This also just makes good business sense apart from increasing value, the quicker you know what is going on with the business, the quicker you can use that knowledge to leverage the good stuff and minimise or prevent the bad stuff!
    5. Innovation – there is, of course, a level of risk associated with innovation, so it’s a balancing act. A business that is always looking for new products or services to sell and is able to provide those with minimal disruption and loss of other business, is always more attractive than a business who keeps doing the same thing.
    6. Business structure – make sure the legal structure of your business is one that maximises protection of assets, including goodwill and any intellectual property, as well as plant and equipment.
    7. And always be ready for sale – even if you don’t intend to sell the business, run it like you are going to sign a sale agreement the next day. This means that the business needs to be clean, up to date, with a clear picture of where it has been, what it is doing and where it intends to be in the future.

    There are many ways in which we can help reduce risk and maximise the value of your business.  If you would like help or advice in this area, give Suelen McCallum from dVT Group a call on 02 9633 3333. 

     

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  • Avoiding the slippery and winding path of phoenix activity!

    News Articles

    The ATO and ASIC have again been in the headlines recently in relation to phoenix* activity and whilst this makes for good reading, it presents a sound reminder to all of us about the consequences of heading down the slippery and winding path of phoenix activity.

    This activity may be tempting for many due to the hollow promises, but as the old saying goes “if it sounds too good to be true, it generally is.”  There is good reason why this old saying still has currency today!

    This has brought into sharper focus the actions of pre-insolvency advisors and the regulators from ASIC & ATO have been reenergized.

    A special task force drawn from these regulators and the Fair Work Ombudsman are collaborating and sharing sensitive financial and other information to reduce this type of activity on the promoters and perpetrators of the incidence of phoenix and other questionable practices.

    Here are some examples of ASIC initiatives to combat illegal phoenix activity:

    1. Enforcement Action: ASIC takes enforcement action against those who facilitate or aid and abet illegal phoenix activity, including directors who breach their duties;
    2. Disqualifying Directors: ASIC can disqualify directors from managing corporations where they have been involved in 2 or more companies placed into liquidation in the past seven years;
    3. Liquidator Assistance Programme: ASIC can assist liquidators to obtain books and records and prosecute the directors;
    4. Education & Engagement: ASIC periodically educates the market of their legal obligations and meet with industry representatives to raise awareness of illegal phoenix activity.  They also work closely with ATO, Fair Work Ombudsman and the Department of Employment to exchange intelligence and information;
    5. and other initiatives such as Director Identity Numbers, Reporting of Tax Debts (see our article Anticipating change-government-law-reforms).

    These initiative are concerned with protecting our economy, employees (through non-payment of wages and superannuation) and not giving those that partake in phoenix activity an unfair competitive advantage.

    But unfortunately, in times of financial stress, business operators tend to grab onto whatever solution that is presented to them, not giving proper regard to the actual solidness of that solution.  It is like they grab onto the first rope that is thrown to them to resolve the immediate issue, only to find out it is not tethered and secure at the other end, possibly resulting in extreme personal loss.

    We can all assist by not letting our clients be victims and fall for these easy but false solutions, peddled by this emerging sector of the market.

    So what can we all do?

    1. Be aware of the characteristics indicating phoenix activity, see Indicators
    2. Be wary of your client receiving unsolicited correspondence, particularly after a court action by a creditor or receiving advice from a source where they have not been prepared to put it in writing
    3. Check and verify companies that you deal with by using ASIC Business Checks to see if they are registered, credit history etc.
    4. If you are concerned or suspect possible phoenix activity, report phoenix activity
    5. Encourage your clients to seek advice from trusted and qualified professionals who hold registered liquidators or registered trustee in bankruptcy qualifications. These are very difficult to attain and are the only qualifications recognized by ATO, ASIC and the Courts

    If you are ever in doubt and would like a fair and unbiased opinion on any situation, call to speak to one of our experts at the dVT Group cost-free on 02 9633 3333 or visit our website dvtgroup.com.au.

     *Phoenix activity is when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements.

    Source:  (from ASIC.gov.au website – how to complain/illegal phoenix activity)

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  • Anticipate, Adapt, Apply: Dealing with change in Government Law Reforms.

    News Articles

    You’re probably aware of the proposed reform of laws relating to tax, wages and super.  Disruption ahead?  Maybe.  But it’s not bad news for businesses that are doing the right thing.  You just need to know what they are and keep on top of the changes.

    A wise man once said, “There is nothing permanent except change”. He was the Greek philosopher, Heraclitus, who lived over 2,500 years ago. As it turned out, he was right.

    The speed of change today might have made him dizzy, but would probably come as no surprise. We already have drones delivering dinner and refrigerators restocking themselves and just ahead are cars that will take over driving.

    Change, both positive and negative, comes at us rapidly and inevitably, and it will have an impact.

    Technological change continuously places demands on businesses to be more efficient and for their provisions of goods and services to be less costly. It is vital for operators in all fields to anticipate the disruptions of advancing technology, and then to be able to adapt and apply them as the means to their own business growth.

    But disruptions are not only technological. They also come as a result of changes in the law, and it’s important for businesses to understand, prepare for, and respond to them. Specifically, we’re referring to a number of law reform initiatives that focus on providing for more ready tax collection, more oversight, and greater protection of employees and consumers. Some reforms are in train, some are before Parliament, and others are being actively discussed.

    Change usually arises out of need. In this case, the proposed law changes centre on the need to anticipate problems associated with insolvent companies that collapse, leaving large tax liabilities and unpaid wages and super contributions. The ATO is often unaware of the deficiencies, employees have no knowledge of their unpaid super, and directors might have used or transferred company assets, which are hard to trace.

    To address these problems, the government is making, or contemplating, various changes:

    • Introduction of Single Touch Payroll:
      Businesses with 20 or more employees will be required to report salaries and wages, PAYG withholding, and super information directly to the ATO at the same time they pay their employees.  This new law commences on 1 July 2018.  To find out more … Single-Touch-Payroll Why? Because too many employers either delay or fail to pay their employees’ super. And when businesses go into liquidation, employees and the government are the losers.
    • Reporting of Tax Debts:
      The government has released draft legislation to allow the ATO to disclose businesses’ tax debt information to registered credit reporting bureaus, which will then be able to provide that information to their subscribers, including banks.  To find out more …  Reporting of Tax Debts Why? Who would lend funds or extend credit to a business that had excessive unpaid PAYG?
    • Targeting of the Black Economy:
      The age-old problem of the ‘cash economy’ is now the subject of increased government attention.  The government is considering a range of measures suggested by its Black Economy Taskforce, focusing on the application of emerging technologies, better use of data and a whole‑of‑government focus. High risk industries are identified for particular attention, including the courier and cleaning sectors.  To find out more …  Targeting of the Black Economy.
    • Penalty Notices:
      The ATO’s director penalty notices are at the moment confined to PAYG and super deductions, making a company director personally liable for amounts owing.  It would seem that the next step could be that the government may be considering whether to add GST as a liability!The government is also planning to supplement these measures with more severe penalties and stricter oversight.

    The Good News:

    The message might sound harsh but, in fact, many of these reforms are beneficial. They will throw some much-needed light on unsavoury conduct in the business world, where unscrupulous operators compete unfairly with compliant businesses.

    Changes are being made in response to what continues to be a serious loss of revenue. The reforms will target the phoenix activity of operators who dispose of a company’s liabilities, but quietly keep its assets. They will focus on businesses that keep their prices down by unlawfully using their workers’ taxes to fund their cash flow, and on directors who use a variety of names and aliases, and apparently healthy credit risks to hide large unpaid taxes.

    Current law reform has all these shady practices firmly in its sights.

    In summary:

    Disruption is not necessarily a bad thing. Whether it’s about rapid technological change or law reform, any initial pain is relieved by more efficient business processes, and a more even playing field for all.  Honest operators need not be concerned but they, and their advisers, should make sure they are informed and equipped to get on top of what’s happening.

    After all, as another wise man, Stephen Hawking, said, “Intelligence is the ability to adapt to change”.

    If you would like help or if you would like to discuss any of the above, please call the dVT Group on 02 9633 3333 or visit our website dvtgroup.com.au.

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  • SMEs should know what grant funding options they may be eligible for!

    News Articles

    Following our article last month on the “Power of Business Reviews for SMEs”, we have received numerous enquiries asking what type of grants are available.  This article covers some of the grants the Australian Government offer to help SMEs for activities such as growth, innovation and commercialisation to help develop these businesses. 

    Operating a small or medium enterprise (SME) can be one of the most demanding, challenging and often rewarding things for a business owner.  This role has become even more difficult over the years as business owners struggle with having to know and understand everything there is about running a business.  With the endless strains on their time and resources, it is no wonder business owners can become overwhelmed and important things overlooked.

    The Australian Government recognises that for SMEs sometimes great ideas for products or services need a helping hand to be developed.  For this reason, in addition to the Business Evaluation Programme covered last month, (https://www.dvtgroup.com.au/power-business-reviews-grants-smes-australian-economy) they also offer the following range of grant funding and services:

    Growth Assistance Grants

    Businesses that wish to take advantage of growth opportunities are able to access grant funding and assistance that is aimed at identifying and capitalising on growth opportunities more rapidly and competently with a reduced level of risk. A growth opportunity refers to an investment in a project that has the potential to grow significantly, therefore reaching more ideal customers or addressing any current trends that are impacting on the industry the business is operating in.

    This grant provides access to experienced advisors who will work with them to develop a unique growth plan. They will guide businesses throughout the entire process from implementing the plan to providing access to knowledge, research and other assistance needed and also helping to maintain growth rates through regular meetings and follow-ups for up to a two year period.

    Eligible businesses will be reimbursed 50% of the costs up to $20,000 for activities directly related to the implementation of recommendations identified in the growth plan.

    Innovation Assistance Grants

    SMEs also have access to innovation assistance and funding which assists businesses to access knowledge, engage with researchers and innovate. This program is a free, no obligation service that connects businesses with an expert innovation facilitator to assess knowledge gaps within the business and provide specialised support tailored to the business. There are two types of services available:

    • Information Technology – assesses a business’s information and technology needs and provides suitable solutions to address these needs. This can help to identify new knowledge, technology and expertise relevant to the business operations.

    A report will be prepared specific to the business current IT infrastructure and business operational needs going forward and outline the IT needs and opportunities of the business and identify some of the solution options available.

    • Research & Development – helps businesses to identify strategic research and developmental needs and identifies pathways to engage with the research sector to enable the business to fast track their research and development. This can involve working alongside any of the Australian Universities or CSIRO.

    This programme includes potential grant funding of up to $130,000 and please note this support and grant is completely separate from the ATO’s R&D tax-incentive. https://www.ato.gov.au/Business/Research-and-development-tax-incentive/

    This ATO programme is another excellent government initiative and if you are not utilising either the R&D tax incentive or the R&D grant, please ask if you are eligible for both or either.

    Commercialisation Assistance Grants

    Developed as a way to help Australian SMEs, researchers and entrepreneurs address the challenges associated with commercialising novel intellectual property (IP) in the form of novel products, services and processes.  This program offers both cash grants and guidance from industry experts.

    The expert advisors assigned to the business assist in finding the right commercialisation solutions that may include matched grant funding to support commercialisation activities of up to $1 million dollars. These industry advisors have extensive experience in commercialising novel products, services and processes and provide businesses with the necessary strategic advice and feedback in order to get novel ideas into the market effectively.

    The objectives of this program are focused around:

    • Accelerating the commercialisation of novel products, services and processes;
    • Creating new business based on novel IP with high potential for growth;
    • Encouraging greater commercial and economic return from research and development to drive business growth and competitiveness.

    Summary

    Over the years, dVT Strategy has successfully helped a large number of businesses gain access into these programmes, with our clients recording positive results and financial uplifts. We work closely with businesses and government advisors to prepare applications for entry into these programmes to ensure they are successfully approved.

    No matter what stage of business development a business is in, it is worth checking what assistance you could potentially be eligible for.

    If you have a business or know someone that may potentially benefit from access to one of these programmes, dVT Strategy are happy to conduct a free no obligation, initial discussion to see how this programme can assist.    Contact Brendan Ryan on 02 9633 3333 or email brendan@dvtgroup.com.au

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  • A handy reference guide – Data Breach reporting and how it may affect you!

    News Articles

    Leading up to the introduction of the data breach laws, we gathered information that we found useful and have shared it with you as it may also be useful for you or someone you know.  Read more about what it is, who it affects and how to report data breaches. 

    What it is?
    On 11 February 2018, new data breach laws came into place (via the Privacy Act 1998)  which compel organisations to report data breaches to the Office of the Australian Information Commissioner (“OAIC”).

    A data breach is when personal information which can lead to serious harm is disclosed or accessible to another party and cannot be prevented by remedial action. While this may seem like it is designed for unauthorised data access, the same laws also apply when information that could be used for identity theft is accidentally sent to a wrong address, so please bear in mind the medium of information is not the issue at hand.

    For more: https:// www.oaic.gov.au/privacy-law/privacy-act/notifiable-data-breaches-scheme/identifying-eligible-data-breaches#eligible-data-breach

    Who it affects?
    If your organisation has an annual turnover of more than $3 million, or is a private sector health service provider, credit reporting body, credit provider, an entity that trades in personal information or tax file number recipients you must report data breaches. Between the wide scope of the entities listed and best commercial practice, it may be prudent to develop a reporting system for yourself in case of a data breach.

    For more: https://www.oaic.gov.au/privacy-law/privacy-act/notifiable-data-breaches-scheme/entities-covered-by-the-ndb-scheme

    There are some exceptions, but they are unlikely to apply to data breaches from a commercial entity outside the health sector (which has a separate reporting scheme).

    Where breaches are suffered by more than one entity, they need only be reported once. As a general rule, OAIC suggests that the disclosure be made by the party dealing directly with the party affected by the data breach.

    For more: https:// www.oaic.gov.au/agencies-and-organisations/guides/data-breach-preparation-and-response#data-breaches-involving-more-than-one-entity

    How to report?
    To report a data breach, you must notify the affected party and lodge a notify the OAIC. The OAIC has an online form for this purpose.

    For more: https:// www.oaic.gov.au/agencies-and-organisations/guides/data-breach-preparation-and-response#what-to-include-in-an-eligible-data-breach-statement

    These laws are designed around breaches of security of personal information, such as dates of birth and TFNs and so do not apply to business information. Also, the OAIC recommends you attempt to remedy the data breach wherever possible and require data breaches to be reported within 30 days of discovering the data breach.

    As a matter of good practice, you may wish to consider advising about breaches of business information as well as personal information. The OAIC also recommends that breaches are reported before the 30 day limit. Most accounting firms will be affected by this reporting regime as they are TFN recipients, however small law firms may not be affected. Overseas bodies operating in Australia are also covered by the reporting regime.

    Some further resources that may also be helpful or interesting:

    ACORN – https://www.acorn.gov.au/ – Australian Cybercrime Online Reporting Network

    IDCARE – https://www.idcare.org/ – A charity that assist individuals with identity and cyber security. Supported by the Australian government and increasingly insurers.

     

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  • Keeping your superannuation protected when bankruptcy strikes!

    News Articles

    In the challenging event of bankruptcy, your super funds could be off limits to creditors and may even be used to fund asset purchases. The Bankruptcy Act states that, if a person becomes bankrupt, funds held in a person’s regulated super fund are protected and unavailable to creditors.

    In addition, a bankrupt person can withdraw money from their super funds and spend these amounts as they wish. If they acquire an asset such as a house and the major portion of the acquisition cost comes from their super funds, the house is also protected from creditors.

    However, there is one major caveat.
    If a person, prior to becoming bankrupt, makes large, ‘out of character’ contributions to their super funds with money that could be paid to creditors, these payments could be taken back. In certain circumstances, the Bankruptcy Act empowers the trustee to claw back such payments into the bankrupt estate.

    The importance of timing:
    The key point is this: The protection afforded by the Bankruptcy Act to funds held in super funds only commences when the person becomes bankrupt.

    Consider this example. An individual, prior to declaring bankruptcy, withdraws money from a super fund and purchases an asset. These funds are not protected and can be taken by the trustee for the benefit of creditors.

     A curious case:
    In discussing this issue, let’s examine a recent case from the Australian Financial Security Authority (AFSA) which has some intriguing facts. The case deals with Ms Kim Britton, aged 60, from Queensland.

    According to the AFSA report, here are the facts of the case:

    • On 12 March 2014, Ms Britton was served a Bankruptcy Notice relating to an unpaid Family Court judgment of $45,000
    • On 17 March 2014, Ms Britton requested her two superannuation providers to withdraw amounts from her funds.
    • On 20 March 2014 and 27 March 2014 Ms Britton duly received $25,401.96 and $33,399.06 which she deposited into her bank accounts
    • On 21 March 2014 and 28 March 2014, Ms Britton made eight cash withdrawals totalling $58,000
    • On 20 April 2014, Ms Britton became bankrupt on her own petition. She subsequently informed the trustee of her bankrupt estate she had spent the $58,000 on living expenses.

    Ms Britton was convicted on two counts of removing property prior to bankruptcy and sentenced to six months imprisonment. However, she was released immediately on a $3,000 good behaviour bond for three years. In passing sentence, the Magistrate took into account the seriousness of the offence and noted the need for deterrence.

    In exploring the facts of the case, it seems that, had Ms Britton left the moneys in her two super funds until she became bankrupt, she could have escaped prosecution. This is because the funds would have been protected by the provisions of the Bankruptcy Act. So, once she had become bankrupt, she could have withdrawn the funds and spent them without the threat of punishment.

    Given that creditors were not disadvantaged, it is curious why AFSA felt the need to take action against Ms Britton.

    We also note the nature of the debt on which the Bankruptcy Notice was based, related to Family Law Act proceedings possibly involving her former spouse/partner. Ms Britton may have been fearful that she would lose the moneys in her super funds when she became bankrupt and that her former spouse/partner, acting as a creditor, would receive some of these funds. To avoid this event, she withdrew and spent the funds in the three weeks prior to becoming bankrupt.

    From our perspective, it seems that when contemplating bankruptcy, Ms Britton either did not seek professional advice concerning the status of her super funds or she received advice from someone who had little or no understanding of the interaction between super and bankruptcy.

    Getting help when bankruptcy looms:
    This somewhat sad tale demonstrates the need to obtain quality professional advice in the event of someone facing or contemplating bankruptcy. dVT Group’s Personal Insolvency team has extensive experience and knowledge on all the facets of the Bankruptcy Act and the potential impact of bankruptcy on a debtor and their creditors.

    They can assist creditors and/or their legal representatives who are considering whether or not to take bankruptcy action against a debtor. dVT Group can also help ascertain the steps and costs involved in the process in making the debtor bankrupt and what happens after the debtor is made bankrupt and a trustee is appointed to administer their bankrupt estate.

    Special thanks to Bob Cruickshanks for his technical expertise and valuable perspective on this subject.   If you would like to know further in relation to a specific situation, please call the dVT Group on 02 9633 3333 or visit our website dvtgroup.com.au.

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  • The power of business reviews and grants for SMEs and the Australian economy.

    News Articles

    Government business reviews and grants have become secret tools for small medium enterprises (SMEs) to obtain affordable help to grow their business, while assisting growth in the Australian economy. Find out how you can benefit from a network of support and advice to improve your business capabilities and competitiveness.

    According to the Australian Bureau of Statistics (ABS), as of June 2016 there were nearly 2 million SMEs trading in Australia. The ABS defines SMEs as any business employing less than 200 people with an annual turnover between $100,000 – $25 million.

    Because the importance of this integral business segment is overlooked, the Australian Federal Government is providing a free initiative to support growth to help increase the productivity of these SMEs.

    Unfortunately, this initiative is not well known outside government circles, so it is often overlooked by many typical advisors to the SME market. dVT Strategy (part of the dVT Group) is one of the few advisors that have recognised the value of this programme and have already assisted over 100 SMEs gain access to the programme and benefit from the outcomes.

    In order to be eligible for the programme a business must satisfy three key areas:
    • Be operating for more than three years
    • Have a turnover between $1.5 million and $100 million
    • Be operating in any of the following areas: advanced manufacturing; food and agribusiness; medical technologies and pharmaceuticals; mining equipment, technology and services; oil and energy resources; or providing enabling technologies/services to one of those previously mentioned. These areas have been identified as growth sectors within Australia.   (NB: the category of enabling technologies/services can be very broad and many business types can fall into this category. Ask us if your business fits).

    dVT Strategy take the time to firstly pre-qualify businesses to ensure they are suitable for entry into the programme. Understanding how busy business owners can be and how involved the exercise can be, dVT takes a hands-on approach to drive the application process and work alongside their network of businesses advisors to ensure the application is successfully approved. dVT Strategy are happy to say that to date, they have achieved a 100% strike rate for their clients.

    Taking part in this programme provides businesses with a skilled and experienced government employed business advisor who will visit the business premises to review business operations, including business direction and strategy. The business advisor will also undertake further research and analysis of information offsite. The review conducted by the advisor equates to approx$10,000 – $15,000 worth of consulting, at no cost to the business.

    The outcome from this review is a holistic business assessment, ratio analysis, global benchmarking, industry reports, connections to a variety of grants and a tailored business evaluation report outlining recommendations that a business can adopt to become more competitive, improve and grow within the industry. Results from an ABS study into the performance of businesses who have participated in this business evaluation programme, showed that their performance significantly increased more than similar businesses that did not participate.

    After the review, knowing what to do and how to implement the recommendations identified in the report can prove to be overwhelming and time consuming for the business owners to undertake alone. That’s why as part of the programme, the business is then eligible to access a grant of up to $20,000 to spend on an external consultant to help deliver on the key recommendations.

    Engaging an external consultant, such as dVT Strategy, to assist in the delivery of the recommendations identified can add a significant return on investment. dVT Strategy have successfully helped a large number of businesses over the years to implement these recommendations, seeing positive results and a financial uplift. They have also helped these clients access a number of additional, and often larger grants, to support their new found growth opportunities.

    The ABS identified that those businesses that received further support through access to grants went on to further increase their performance by more than 80% above those that received a business evaluation but did not access the programme funding. Results showed an uplift of $300,000 – $400,000 for those businesses that received the evaluation and $600,000-$800,000 for those that utilised the grant.

    Here are examples of businesses we have helped with this programme, in the industries of:  

    dVT Strategy thrive on seeing SMEs grow and realise their potential. If you have a business, or know someone who may be interested in accessing this programme, dVT Strategy are happy to conduct a free no obligation, initial discussion to see how this programme can assist.  Contact Brendan Ryan on 02 9633 3333 or email brendan@dvtgroup.com.au.

    (ABS Study on Enterprise Connect Business Review and Tailored Advisory Service Client Performance)

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  • Inspiration from the Special Olympics at our yearly fundraising breakfast!

    Community

           

    dVT Group have been working with Special Olympics Australia since 2005 across various events.  Suelen McCallum, partner at the dVT Group, is always keen to give back to the community and has been the chair of the Inspirational Women’s Breakfast committee since it’s inception in 2012.

    This year we had another successful Special Olympics Inspirational Women’s Breakfast held on 7 March 2018 at the QVB Tea Rooms, which was sold out early.  It was truly inspiring as we heard from our guest speakers Kate McClymont (Investigative Journalist, SMH), Mary Coustas (Writer/Performer well known as Effie), Ming Long (Business woman, Property Pioneer & Advocate for Male Champions of Change and Board Diversity).

    One of the highlights was when Mel, one of the Special Olympic athletes, asked us all to verbalise out loud the Special Olympics pledge….. “Let me win. But if I cannot win, let me be brave in the attempt.”

    Our special thanks goes to everyone who supports Special Olympics and we are happy to have raised over $27,000 for the athletes from this breakfast.

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  • New Emerald Coal Pty Ltd (Administrator Appointed) (Receivers Appointed) A.C.N. 148 891 865

    Creditor Reports

    On 21 May 2018, Riad Tayeh was appointed Voluntary Administrator of New Emerald Coal Pty Ltd  (A.C.N. 148 891 865).

    By proceeding to view information about New Emerald Coal Pty Ltd, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find a report to creditors available here Report to Creditors 18.6.18

    Creditors of the company can find a supplementary report to creditors available here Supplementary Report to Creditors 10th August 2018

    If you believe you are a creditor of the company or if you hold information which may assist the administrator in their investigations into the affairs of the company, please do not hesitate to contact Troy Graham or Jenny Stojanoska of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Our Process

    Business Strategy Process09/08/2018

    Our clients rely on us to deliver practical and achievable outcomes.

    We do this by using our proven process listed below together with our willingness to go the extra step and to roll up our sleeves to work with you to ensure we surpass your expectations:

    • We initially meet with all our clients to determine their needs and objectives and will design a specific consulting programme that suits their specific needs and situation.
    • As part of this initial meeting, we will assess if there are any grants that can be utilised to assist this process.  N.B.  there are no cost obligations at this stage.
    • We will formalise an engagement to agree the scope, timelines and costs before we start any work.
    • The works programme will commence usually involving face to face meetings at your place of work or via teleconference.
    • Where possible, once a solution has been developed, we will work with you to implement and deliver the change to your business.  N.B. this part may be a separate engagement.

    See our detailed flow chart below:

    Strategy Process Map

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  • Ensure your business exit strategy extracts the maximum value from your business when selling!

    Business Strategy Articles07/08/2018

    There comes a day when a business owner decides it’s time to sell all or part of their business. It may be for one of many reasons including bringing in investors, providing a buy in mechanism for management, selling to purchase a new business or for retirement purposes. It is often disappointing for business owners to discover that failing to plan ahead – by not having a properly crafted business exit strategy – often results in a reduction of the value of the asset that is their business or that they find it very difficult to sell at all.

    This is where preparing for the transaction can increase the enterprise asset value and maximise the return to the business owner. All business owners will need to do this at some stage when they ultimately decide to step down from the business, so why not start early and include this in your business exit strategy, ensuring that the maximum value is extracted from the business.

    Having a succession plan can also give you more options and this will allow you to select the option that is in the best interest for you and your business.

    Different options:

    There are a number of ways that the sale of your business can be structured with different risks and considerations associated with each of them:

    Trade Sale – selling your business on the open market is the most common exit option. The list of potential buyers could include investors, competitors as well as suppliers and other aligned businesses wishing to expand their operations. The sale of your business to an external party can also be an excellent way of allowing an owner to completely separate themselves from their operations in the cleanest and quickest way possible.

    The key challenges that are associated with a trade sale is that there is a high risk placed on the purchaser around the reliance of the business on the current owner for both the day to day tasks as well as customer and supplier relationships. This risk can influence their decision as to whether or not to purchase the business. Often a purchaser may want to minimise this reliance risk by contracting the current owner into the business as an employee for a period as well as structuring the sale so that a portion is paid immediately and a second portion is paid out at a later date and is subject to the ongoing performance of the business.

    Family or internal succession – keeping the business within the family is a source of pride for some owners. As part of this succession option, the owner gets to leave a legacy behind by handing over an asset that continues in their name, as well as providing jobs, income and opportunities for generations to come.

    However, when succession planning and family relationships intersect, tension can emerge. While you might want your family members to take over, is the next generation interested? If they feel that they are obligated to take over the business, they may not have what it takes to ensure its continuing success.

    Determining whether family members are interested in taking over the business early on is important in being able to properly plan for what will happen to the business when the owner is ready to move on. Another key consideration is that the younger generation will rarely have the funds to purchase the business outright or the personal assets to secure a loan to payout the original owners. The way this is usually circumvented is by the old owner providing vendor finance to the related party which places a lot of risk back on the original owner. If the business doesn’t perform and they lose control, they may never get paid for the sale, which is then an issue particularly if the sale proceeds are needed to fund their retirement.

    Management buy-out – it may not just be family members that are keen to take control of your operations. Your management, employees or a mixture of both may be eager to take over the reins. In this case, you may be able to sell your business to a group of individuals within the business.

    In this option, those purchasing your business will largely be known to you, the owner. They have spent time watching the business grow, working together to overcome challenges and have an extensive knowledge of the product, market and customer. This can be a useful factor in ensuring business continuity during the sale or transaction process.

    This option however may be a lengthier process as there are multiple stages before the business is sold and the owner can step away. It requires additional legal documentation such as shareholder agreements and/or buy sell agreements and potentially vendor finance.

    The ability of the purchasers to fund the transaction can again be an issue with a reliance on vendor financing. Having multiple purchasers also adds to the complexity of ownership and management during any transition period.

    It should be noted that this method can be made safer for the owners if staged over a longer period of time and by using a structure whereby bonuses are used to gradually (and at least partially) fund the purchase over a period of time. This ensures the purchaser can afford the transaction and the owners can extract the value from the business whilst maintaining a level of control.

    Do nothing – many owners may not consciously choose this option, but if there is no business exit plan for succession in place, owners are in fact doing nothing and unfortunately this is all too common. By the time the owner is no longer able or willing to run the business, the only option available may be to shut the business down if no one is interested in buying.

    As can be seen, there are a number of different ways a business can be sold Choosing the best option involves the consideration of a number of factors. It is also essential to be flexible and have an open mind about your preferred succession options, as potential purchasers’ circumstances may change and having a plan B is always advised. For example, don’t hold out for your children to buy you out, as more often than not, they won’t be interested!

    The ability to sell your business will become increasingly important for small and medium enterprises as there are still a large number of business owners from the baby boomer generation, which may mean a glut of business for sale and a shortage of like for like potential new owners to replace them. Unfortunately, this may see many businesses either being shut down or rolled up into a larger competitor.

    Key considerations when preparing  your business for sale:

    1. Separating the owner from the business i.e. can the business operate without the owner? A good litmus test for this is …. can the owner take an extended holiday without receiving any calls from the business? If the answer is no, then the investor will be reluctant to buy your business as they will likely need to replace your skills with expensive management which reduces their return on investment. This leaves the owner with internal succession or having to find a like for like owner with the right skills set willing to step in and take over the business.
    2. Preparing the business accounts to show maximum profits whereas a business will typically present the accounts to minimise tax. The more profit you show the more you can ask for the sale and the more a purchaser will be willing to pay or a bank be willing to fund a new purchaser.
    3. Being able to emotionally let go and/or step back allowing someone else to take over or step up to the role. Many business owners underestimate the emotional connection they have with their business especially if they founded the business.
    4. Finding other things to do, especially if retiring. Stopping work altogether may not always be a good option as it may cause business owners to become bored and this may lead to both physical and mental health issues.

    Life gets busy when you are running a business and planning for a business’s future, particularly one that may seem quite distant, can sometimes be neglected. Good strategic planning should incorporate preparing a business for the eventual business sale to improve the return generated and to increase the chance of selling it in the first place.

    At dVT Strategy we have successfully assisted and prepared succession plans and business exit strategy plans for our clients and are happy to initiate discussions to help you prepare for the future.

    If you would like to discuss the best succession options for you and your business, speak to Brendan Ryan at dVT Strategy today on 02 9633 3333.

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  • The power of business reviews and grants for SMEs, business growth and the Australian economy.

    Business Strategy Articles

    Government business grants and reviews have become secret tools for small medium enterprises (SMEs) to obtain affordable help for business growth , while assisting expansion of the Australian economy. Find out how you can benefit from a network of support and advice to improve your business capabilities and competitiveness.
    According to the Australian Bureau of Statistics (ABS), as of June 2016 there were nearly 2 million SMEs trading in Australia. The ABS defines SMEs as any business employing less than 200 people with an annual turnover between $100,000 – $25 million.
    Because the importance of this integral business segment is overlooked, the Australian Federal Government is providing a free initiative to support business growth to help increase the productivity of these SMEs.
    Unfortunately, this initiative is not well known outside government circles, so it is often overlooked by many typical SME business advisors to the market. dVT Strategy (part of the dVT Group) is one of the few advisors that have recognised the value of this programme and have already assisted over 100 SMEs gain access to the programme and benefit from the outcomes.
    In order to be eligible for the programme a business must satisfy three key areas:
    • Be operating for more than three years
    • Have a turnover between $1.5 million and $100 million
    • Be operating in any of the following areas: advanced manufacturing; food and agribusiness; medical technologies and pharmaceuticals; mining equipment, technology and services; oil and energy resources; or providing enabling technologies/services to one of those previously mentioned. These areas have been identified as growth sectors within Australia. (NB: the category of enabling technologies/services can be very broad and many business types can fall into this category. Ask us if your business fits).
    dVT Strategy take the time to firstly pre-qualify businesses to ensure they are suitable for entry into the programme. Understanding how busy business owners can be and how involved the exercise can be, dVT takes a hands-on approach to drive the application process and work alongside their network of business advisors to ensure the application is successfully approved. dVT Strategy are happy to say that to date, they have achieved a 100% strike rate for their clients.
    Taking part in this programme provides businesses with a skilled and experienced government employed business advisor who will visit the business premises to review business operations, including business direction and strategy. The business advisor will also undertake further research and analysis of information offsite. The review conducted by the advisor equates to approx$10,000 – $15,000 worth of consulting, at no cost to the business.
    The outcome from this review is a holistic business assessment, ratio analysis, global benchmarking, industry reports, connections to a variety of grants and a tailored business evaluation report outlining recommendations that a business can adopt to become more competitive, improve and grow within the industry. Results from an ABS study into the performance of businesses who have participated in this business evaluation programme, showed that their performance significantly increased more than similar businesses that did not participate.
    After the review, knowing what to do and how to implement the recommendations identified in the report can prove to be overwhelming and time consuming for the business owners to undertake alone. That’s why as part of the programme, the business is then eligible to access a grant of up to $20,000 to spend on an external business development consultant to help deliver on the key recommendations.
    Engaging an external consultant, such as dVT Strategy, to assist in the delivery of the recommendations identified can add a significant return on investment. dVT Strategy have successfully helped a large number of businesses over the years to implement these recommendations, seeing positive results and a financial uplift. They have also helped these clients access a number of additional, and often larger grants, to support their new-found growth opportunities.
    The ABS identified that those businesses that received further support through access to grants went on to further increase their performance by more than 80% above those that received a business evaluation but did not access the programme funding. Results showed an uplift of $300,000 – $400,000 for those businesses that received the evaluation and $600,000-$800,000 for those that utilised the grant.

    Here are examples of businesses we have helped with this programme, in the industries of:  

    dVT Strategy thrive on seeing SMEs grow and realise their potential. If you have a business, or know someone who may be interested in accessing this programme and experiencing serious business growth, dVT Strategy are happy to conduct a free no obligation, initial discussion to see how this programme can assist. Contact Brendan Ryan on 02 9633 3333 or email brendan@dvtgroup.com.au.

    (ABS Study on Enterprise Connect Business Review and Tailored Advisory Service Client Performance)

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  • Managing ownership disputes before it’s too late.

    Business Strategy Articles

    The best solution to ownership disputes is prevention, but in the event of disputes find out how to best manage them to avoid it becoming a serious threat to business.  

    In small/medium enterprises with more than one owner, it is inevitable that partners will occasionally disagree on how the business should be run.  Where an environment of mutual respect embodies the partnership, disputes are able to be quickly and simply resolved. But what happens if partners find themselves in far deeper disputes?

    Many businesses are founded by friends/family who share a vision or idea they hope can be turned into a successful venture. More often than not these ventures are started on trust and goodwill, but  with very little or ineffective documentation of the intended relationships of the parties involved. Too often the stresses connected with managing a growing business, or one that isn’t making money, or dealing with changing personal circumstances, can lead to tensions between owners. If these tensions are not resolved, they can lead to significant damage to a business. The simplest form of disruption is the “distraction factor”.  It takes the owners’ focus off the business and reduces the levels of motivation and effort. This seem relatively inconsequential in the short term but can become significant over time to the point where it impacts on the profitability and/or cash flow and the enterprise value of the business and therefore acts to reduce the value of an owner’s asset.

    As conflict grows, the disruptions spread to other stakeholders including employees and family and it then becomes more and more difficult for the dispute to be resolved.

    The best solution to ownership disputes is prevention.  If two or more people are to work together, it is important to establish at the beginning the respective roles within the business and who will be in charge. This may seem very one sided but that is what is intended as most partnerships still require a “Managing Partner”. This must be a documented process.

    If you are determined to have a business ownership structure where there is equal ownership and decision making control, it is essential to agree to some basic rules which include a “dispute resolution process” and this should be agreed and set out in writing while the business partners are still in the stage of enthusiasm and a working friendship.

    These rules are best documented in a partnership or shareholder agreement, which should allow the owners to quickly resolve any disputes.  If these mechanisms have not been established and a dispute has led to a point of impasse between the concerned parties, then external help should be sought to resolve the position as quickly as possible to minimise damage to the business.

    A simple shareholder agreement can be prepared along these lines by an experienced commercial lawyer and there are many articles available to give guidance on the preparation of the content such as CPA Australia’s Factors to Consider in a Partnership or Shareholder Agreement’ (2016)’.

    If a business finds itself in a position where there is no clear agreement in place and the commercial relationship has begun to degrade to the point where it is negatively impacting, or has the potential to negatively impact, not just the personal relationship but the business itself, it is time to seek external assistance.

    When it comes down to it, there is no ONE way to resolve dispute however the quicker a dispute can be resolved, the less damage that will occur and the sooner the business can look to recover any lost ground. A protracted dispute will not benefit either party and it may mean all parties need to accept a trade-off to reach an outcome. Often business disputes are similar in emotive strain to divorces, they can wreak as much havoc emotionally and financially and be difficult to resolve unemotionally.

    Having an independent party acting in the interest of the outcome rather than the interest of any individual party can greatly increase the likelihood of a mutually beneficial outcome and in a timely manner which will ultimately save the business money and work to preserve the business value.

    Over the last two decades dVT Group have acted in over 100 of these types of scenarios, where we have carefully navigated management disputes to achieve the best possible outcome and often to everyone’s benefit.

    To learn more about ownership disputes, call Brendan Ryan at the dVT Group on 02 9633 3333 or via email brendan@dvtgroup.com.au.

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  • Why strategic planning is essential to sustain business growth

    Business Strategy Articles

    Business growth is a common objective for most business owners, however it is not always easy to achieve, and even if achieved but not managed well, it can cause a business to fail.

    Growth usually requires a business to make some proactive changes and undertake specific activities designed to achieve the growth. It may also require the business to make an investment into resources (in the form of both time and money) to achieve results. The old adage rings true, if you fail to plan you plan to fail.

    If you are looking to grow or are presented with business growth opportunities that you would like to take advantage of, there are two key elements of growth management that all businesses should employ. It is the development of a strategic business plan, which includes sales and marketing, as well as having and practising good quality forecasting that provides visibility on the business cash flow.

    Strategic Business Plan

    A strategic business plan will outline the best way to deliver growth. It will also determine the who, the how and the when of what actions are required to deliver growth. The plan should also provide the mechanisms to track and monitor business growth and provide levels of accountability on those responsible for delivering the growth. As well as the sales and marketing requirements, an effective strategic business plan also considers the business operations, HR and finance needed to achieve the growth and to then effectively manage the growth.

    Once sales growth is achieved, in either a planned or unplanned fashion, a number of issues can arise with the three most common ones being as follows:

    • An increase in sales does not always equal an increase in profit and or cash available to the business. For example, the increase in turnover may be achieved by taking on a larger client but in order to secure the client, margins are reduced, and payment terms extended. This action whilst increasing turnover, can deplete cash reserves. Increased sales also mean increased cash outflow, however if there is also a reduced GP margin and longer terms given it means a slowdown in cash inflows.
    • The growth of the business can also mean it becomes too large for the founder/manager to be across every aspect of the business, which challenges both the management capabilities and the culture of an organisation. As a result, the business can lose its competitive advantage or unique value proposition that allowed the business to grow in the first place.
    • Management information systems are imperative as a business grows, but often one of the last investments to be made.

    Forecasting

    Strategic business plans accompanied with forecasts that consider the current business model including the current operational and management capacity can then incorporate both the Capex and Opex costs required to deliver the growth plans. This will provide a business with several significant advantages.

    The aim is for there to be no surprises. This forecasting provides real clarity as to how the growth will impact your GP and NP margins and allow the business to plan accordingly. If for example the business has visibility on the cash requirements, it can plan for the additional debt or equity required to fund the growth at the right times. If that additional cash needs to come from debt, the likelihood a lender will provide additional working capital facilities is greatly increased if the business has good visibility and plans are in place to manage the growth. The strategic plan and the forecasting become tools that enable the lenders to provide the required funding.

    Sometimes having visibility means a business can make the hard but ultimately wise decision on when not to grow. This should be the case when additional resources such as cash or management skills are not actually available. This hard decision can in certain circumstances ultimately save a business from failure and protect the existing business.
    In summary, business growth is not easy to achieve and is not always the remedy for all business problems. For a business to achieve it, it will need to make certain investments upfront and be prepared to make changes in the business. The first investment should be into the creation of a solid strategic plan and the subsequent preparation of detailed forecasting. These two actions will not only greatly increase the chances of achieving the business growth goals but also de-risk the growth so that the revenue growth can be translated into profit growth.

    If you would like advice on how to start planning for your own business growth, please call Brendan Ryan at the dVT Group on 02 9633 3333 or via email brendan@dvtgroup.com.au  for a FREE consultation. 

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  • How to apply for small and medium business grants, and what you need to know

    Business Strategy Articles

    Following our article last month on the “Power of Business Reviews for SMEs”, we have received numerous enquiries asking what type of small and medium business grants are available. This article covers some of the grants the Australian Government offer to help SMEs for activities such as growth, innovation and commercialisation to help develop these businesses.

    perating a small or medium enterprise (SME) can be one of the most demanding, challenging and often rewarding things for a business owner. This role has become even more difficult over the years as business owners struggle with having to know and understand everything there is about running a business. With the endless strains on their time and resources, it is no wonder business owners can become overwhelmed and important things overlooked.

    The Australian Government recognises that for SMEs sometimes great ideas for products or services need a helping hand to be developed. For this reason, in addition to the Business Evaluation Programme covered last month, (https://www.dvtgroup.com.au/power-business-reviews-grants-smes-australian-economy) they also offer the following range of grant funding and services:

    Growth Assistance Grants

    Companies that wish to take advantage of business growth opportunities are able to access grant funding and assistance that is aimed at identifying and capitalising on growth opportunities more rapidly and competently with a reduced level of risk. A business growth opportunity refers to an investment in a project that has the potential to grow significantly, therefore reaching more ideal customers or addressing any current trends that are impacting on the industry the business is operating in.

    This small and medium business grant provides access to experienced advisors who will work with them to develop a unique growth plan. They will guide businesses throughout the entire process from implementing a business plan to providing access to knowledge, research and other assistance needed and also helping to maintain growth rates through regular meetings and follow-ups for up to a two year period.

    Eligible businesses will be reimbursed 50% of the costs up to $20,000 for activities directly related to the implementation of recommendations identified in the growth plan.

    Innovation Assistance Grants

    SMEs also have access to innovation assistance and business funding which assists companies to access knowledge, engage with researchers and innovate. This program is a free, no obligation service that connects businesses with an expert innovation facilitator to assess knowledge gaps within the business and provide specialised support tailored to the business. There are two types of services available:

    • Information Technology – assesses a business’s information and technology needs and provides suitable solutions to address these needs. This can help to identify new knowledge, technology and expertise relevant to the business operations.

    A report will be prepared specific to the business’ current IT infrastructure and business operational needs going forward and outline the IT needs and opportunities of the business and identify some of the solution options available.

    • Research & Development – helps businesses to identify strategic research and developmental needs and identifies pathways to engage with the research sector to enable the business to fast track their research and development. This can involve working alongside any of the Australian Universities or CSIRO.

    This programme includes potential grant funding of up to $130,000 and please note this support and grant is completely separate from the ATO’s R&D tax-incentive. https://www.ato.gov.au/Business/Research-and-development-tax-incentive/

    This ATO programme is another excellent government initiative and if you are not utilising either the R&D tax incentive or the R&D grant, please ask if you are eligible for both or either.

    Commercialisation Assistance Grants

    Developed as a way to help Australian SMEs, researchers and entrepreneurs address the challenges associated with commercialising novel intellectual property (IP) in the form of novel products, services and processes. This program offers both cash grants and guidance from industry experts.

    The expert advisors assigned to the business assists in finding the right commercialisation solutions that may include matched grant business funding to support commercialisation activities of up to $1 million dollars. These industry advisors have extensive experience in commercialising novel products, services and processes and provide businesses with the necessary strategic advice and feedback in order to get novel ideas into the market effectively.

    The objectives of this program are focused around:

    • Accelerating the commercialisation of novel products, services and processes;
    • Creating new business based on novel IP with high potential for growth;
    • Encouraging greater commercial and economic return from research and development to drive business growth and competitiveness.

    Summary

    Over the years, dVT Strategy has successfully helped a large number of small and medium businesses gain access into these grants and programmes, with our clients recording positive results and financial uplifts. We work closely with businesses and government advisors to prepare applications for entry into these programmes to ensure they are successfully approved.
    No matter what stage of business development a business is in, it is worth checking what assistance you could potentially be eligible for.

    If you have a business or know someone that may potentially benefit from access to one of these programmes, dVT Strategy are happy to conduct a free no obligation, initial discussion to see how this programme can assist. Contact Brendan Ryan on 02 9633 3333 or email

    If you have a business or know someone that may potentially benefit from access to one of these programmes, dVT Strategy are happy to conduct a free no obligation, initial discussion to see how this programme can assist. Contact Brendan Ryan on 02 9633 3333 or email brendan@dvtgroup.com.au

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  • Business Mentors:  a secret weapon behind thriving businesses!

    Business Strategy Articles

    We are all aware of the numerous challenges business owners face when running a business.  These challenges can be grouped into three key areas being:

    1. Having the skills and experience needed across every aspect of the business:
      Most businesses are started by people that have an idea, skill or passion for a particular product or service. Whilst they are often very good in their area, very few also understand or are highly proficient at HR, Operations, Finance and Sales & Marketing, which are basic requirements for every business owner to run a successful business.They often learn this knowledge and experience from first-hand situations, but this can be both costly and demanding for a business owner. Larger businesses will employ a large team of specialist managers who have the required skills in each of these specific areas, but for a smaller business who is yet to generate the profits to afford the large management team, this responsibility falls back onto the owner.
    1. Managing the business whilst dealing with personal conflicts, culture, and history;
      The second key challenge for a small business owner is that at some stage they are likely to need to make a choice between a sound business decision or maintaining a personal connection, which often occurs in small businesses who work with, employ, buy from or sell to family or friends.  Many times these personal relationships have been built up over many years and often a business owner continues with them despite knowing it is no longer the best outcome for their business. A perfect example of this is having a staff member in your business who has been there since the business started, however, they are not performing, are difficult to deal with or are causing issues, yet the owner continues to employ them through a sense of loyalty.
    1. Having the time to step out of the business and work on the business:
      The third key challenge for business owners relates to the old adage of “working on the business vs working in the business”. The daily pressures of getting work done, meeting deadlines and managing everything can take a toll on the efficiency of the business. It also means that there is not the time to identify the issues, (Refer the boiling frog syndrome) let alone focus on what can be done to improve performance.

    This all means that a business owner needs to work smarter, not harder and that they need to ensure they have the right support.  Having a business mentor and a network of trusted experts can help business owners with the advice and support to address the challenges in these three key areas.

    There is sometimes the perception that having a mentor means that a business is struggling and is looking to get back on track.  In reality, many thriving businesses use mentors as their secret weapon.

    So what is a mentor?

    A mentor is an experienced individual who employs their own knowledge and skills to help coach business owners through the challenges of running and growing a business.  They can provide experienced, challenging and non-biased advice that help make informed decisions for the business.  A mentor can also act in a similar way as an advisory board but at a one to one level that has the ability to be flexible in its approach.

    How can a mentor help?

    A mentor can make valuable contributions in these areas:

    • Identify issues within the business that may be impacting on overall performance
    • Provide direct assistance in solutions to remedy issues
    • Act as a sounding board for ideas and concerns & give thoughts on major business decisions
    • Coach the owner on how to achieve their own personal goals within the business environment and gain some sort of work-life balance
    • Setting goals, introducing new strategies and tracking process to ensure you understand how the business is tracking.
    • Assist with compiling a business plan
    • Drive performance and delivery of the business plan
    • Improve business sales and help you to find new opportunities
    • Provide linkages to other experts to assist in remedying issues

    The benefits of having a mentor will vary from business to business and will range from utilising their business knowledge and experience right through to evolving both professionally and individually. Success for your business cannot be accomplished without both you and the business performing effectively.

    Business mentors do come at a cost, but the cost to the business is only a fraction of employing a management team and represents a strong investment when you consider the financial return they can bring.  Business owners that get the most out of engaging with a mentor are ready for change and are committed to achieving strong results.  They also understand the effect that wasted time, money and valuable resources on ideas that may not be effective has on the business.

    At dVT Strategy, we act as mentors to all of our clients and coach them through any issues that they may encounter. We ensure that our clients are kept accountable to their goals and are regularly challenged on their progress. As a result, we have seen a number of our clients achieve goals they originally deemed unobtainable and as a result, have received and enjoyed increases in their financial return.

    If you or someone you know is worried about their business or would like to receive an objective view of how a business is performing; or are ready to take the business to the next level, contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email brendan@dvtgroup.com.au.

     

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  • Article 1

    Uncategorized
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  • Business Strategy

    Business Strategy Case Studies

    A business case of how the dVT Group worked with complex cultural and hierarchal considerations of the Church to consider the specific objectives of the Church leaders and the needs of the community, to obtain a unified acceptance of the recommended strategies.


    Situation:

    dVT Consulting were approached by a national religious organisation for assistance in
    reviewing the social services arm of the Church. Whilst the objectives were relatively clear, being a
    registered not for profit organisation responsible for raising funds as well as delivering services, meant a
    complex set of rules and regulations to adhere to. The organisation and the controlling board needed to
    heed the obligations of corporate law, regulations of the Australian Charities and not-for-profits
    Commission and the rules that apply to the church. With limited resources and complex cultural and
    church based hierarchal considerations, the organisation was struggling to achieve its objectives and
    lacked the appropriate corporate governance to manage its risks.

    Actions:

    A series of interviews with the Church leaders, board members of the social services body as
    well as a review of the market and structures of similar organisation operating a “best practice” model
    identified a series of options available to the church. Each option required a “trade off” in terms of the
    objectives of the church and as such recommendations were made on a best course of action based on the
    available resources, the specific needs of the community and the priorities as set by the Church leaders.
    This recommendation involved a hybrid of two of the identified options . This then required a smaller
    and more clearly defined internal structure, managing largely outsourced services accessed via other
    providers. This option allowed the church to retain a degree of autonomy and management of the
    process but enabled delivery of a wider range of services to more of their congregation at a lower but
    known and set price.

    Outcomes:

    Recommended strategies were accepted by the Church leaders and the implementation process is
    currently being rolled out. The cost of these services to the church are being shared equally across the
    national organisation now that the entire community can benefit.
    Supporting documentation including corporate governance and communication guidelines are being
    written. This is to avoid the cultural and hierarchal challenges present within a church based environment
    and thereby allow the autonomy of a newly appointed board and management team to deliver on the
    objectives.

    When you consider the complex cultural and church based hierarchal considerations of this assignment,
    it highlights how effective and successful implementation of this type of exercise would be for a business
    where there is a unified approach with a single overall business goal.

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  • Erin Garlick

    Uncategorized03/08/2018
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  • TEST INVESTIGATIONS

    Investigations and Forensic Services02/05/2018
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  • Information on Corporate Insolvency

    Creditor Information

    These information sheets have been produced by ASIC and ARITA to assist you if you are affected by a company’s insolvency.

    They are written to give directors, employees, creditors and shareholders a basic understanding of the most common company insolvency, liquidation, voluntary administration and receivership.

    Please note this is for general guidance only. Many of the terms have a specific technical meaning in certain contexts that may not be covered here.

    Click on the links below:  

    Voluntary administration – a guide for creditors:  Voluntary administration for creditors
    Voluntary administration – a guide for employees: Voluntary administration for employees
    Liquidation – a guide for creditors: Liquidation for creditors
    Liquidation – a guide for employees: Liquidation for employees
    Receivership – a guide for creditors: Receivership for creditors
    Receivership – a guide for employees: Receivership for employees
    Insolvency – a guide for shareholders: Insolvency for shareholders
    Insolvency – a guide for directors: Insolvency for directors
    Insolvency – a glossary of terms: Insolvency a glossary of terms
    Approving fees – a guide for creditors: Approving fees for creditors

    Creditor rights – liquidation: Creditor rights liquidation
    Creditor rights – voluntary administration: Creditor rights voluntary administration
    Remuneration of an external administrator: Remuneration
    Proposals without meetings: Proposals without meetings
    Committees of Inspection: Committees of Inspection
    Offences and recoverable transactions in a voluntary administration:  Offences and recoverables

     

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  • Information on Personal Insolvency (Bankruptcy)

    Creditor Information

    These information sheets have been jointly developed by AFSA and ARITA as a resource to help creditors in the event of personal insolvency.

    Please note this is for general guidance only. Many of the terms have a specific technical meaning in certain contexts that may not be covered here.

    Click on the links below:

    Creditor Information Sheet – approving a trustee’s fees:  Creditor Information Sheet

    Creditor rightsCreditor rights

    Proposals without meetingsProposals without meetings

    Committees of InspectionCommittees of Inspection

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  • Riad Tayeh

    Business Strategy Team11/04/2018

    Riad began his career at Coopers & Lybrand, moving to Ferrier Hodgson Sydney, and then Ferrier Hodgson Hong Kong. For ten years he specialised in insolvency, corporate restructure, financial investigation and turnaround strategy. In the Hong Kong market Riad restructured listed companies, managed major liquidations, undertook fraud investigations and provided litigation support.

    He has also assisted various companies in restructuring, obtaining equity, acquiring businesses and implementing exit strategies.

    Riad has over 30 years insolvency and accounting experience and enjoys a reputation as a tough-minded and astute practitioner, offering clients an energetic and practical approach to business solutions.


    He joined Antony de Vries in partnership in February 2002 bringing considerable commercial acumen and insolvency experience.

    Community Work:

    Riad has been involved in various fund raising events for charities, mainly around the intellectual disability space:

    • Fund raising events throughout Australia as President with TMA
    • Sportsmans lunch raising funds for the Special Olympics in NSW, VIC and QLD
    • Established Laugh Out Loud breakfast event with over 700 attendees annually for Special Olympics
    • Instrumental in establishing Get on Stage Lunch held at Riverside Theatre to raise funds for the intellectually disabled people to be able to participate in the Theatre
    • Volleyball Australia/Oceania Volleyball/Asian Volleyball Confederation

    Qualifications and Memberships:

    • Bachelor of Economics, Sydney University
    • Fellow of Chartered Accountant Australia & New Zealand
    • Member of the Australian Restructuring, Insolvency & Turnaround Association
    • Member and Former President of the Turnaround Management Association of Australia (TMA)
    • Registered Liquidator

    Areas of Expertise:

    • Corporate Restructure
    • Corporate & Personal Solvency
    • Bankruptcy
    • Consultancy
    • Strategic Planning
    • Turnaround Management
    • Succession Planning
    • Business Growth

     

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  • Be aware of the “boiled frog syndrome” in business!

    News Articles23/02/2018

    Welcome to part two of our podcast series with Joanna Oakey, Lawyer at Aspect Legal and Antony de Vries, Partner at dVT Group. In this podcast we dig deeper into the underlying concepts and warning signals that business owners and their accountants and other professional advisers should be looking out for.

    The main points covered in the podcast include:  
    a)  Importance of financial information;
    b)  Good growth vs Bad Growth;
    c)  The concept of having enough;
    d)  The danger of over exposure;
    e)  The boiled frog syndrome;  and
    f)   Talking to your accountant. 

    Financial Information – Cash Flow:
    Poor cash flow is always one of the biggest issues when running a business.  It is difficult to know what your cash position is if your financial records are disorganized, incomplete or you don’t understand how to read them.

    The podcast (see link below) features an example of a white goods retailer that, whilst was generating extra sales as a result of an advertising campaign, was actually creating a false economy as the selling price turned out to be less than the cost price.  This was due to the actual true cost being clouded by complex ways of dealing with rebates and stretch targets from suppliers.  In fact, the more he sold the more he lost.

    To avoid getting to this point, it is critical to have and understand the proper financial information to identify issues and allow corrective action to be taken early.

    Good growth vs Bad growth:
    Directors or shareholders often start to tip money into a business as they have this underlying belief that the business is growing and that anything that is growing is good without obtaining the right financial advice to really understand if it is good growth or bad growth!

    When a business is growing, it often experiences similar signs of cash flow pressure as a business that is actually struggling or shrinking. Obtaining more funds can help, but it also masks the problem.  You need to differentiate between the symptoms and the causes.  An example is also featured in the podcast. 

    The concept of having enough:
    In business, we all understand the simple concept of making sure you can sell your product or your service for enough to cover the costs, plus the actual costs of the infrastructure that you need to be able to put you in the environment whereby you can provide that service or product.

    Whilst it is a simple concept, it is not always clear in reality.  You need to continually look for the signs that may indicate that this is not happening, such as exceeding overdraft limits, bouncing of cheques, defaulting on loans or interest payments etc.  

    Asking for help and obtaining assessments of where your business is can help identify where leakages are so they can be rectified early before it’s too late.  And with prudence, hard work and a little luck you can actually avoid disasters.

    The concept of overexposure (or too much concentration on one customer):
    Another sign is when clients have over exposure to a large amount of money that they are owed from one particular client.  In this case, it is important for business owners to understand the risks associated if that particular client was to be wound up and they end up with only 5 or 10 cents in the dollar for the money that’s outstanding to them.  It is imperative to look out for possible insolvency signs or signals from these clients. 

    Other warning signs are when payments being made to clients end in round figures, indicating that invoices are not being paid in full.   If this is your one and only customer, you must take the necessary precautions and action, otherwise it may affect you like a virus and you are going to suffer.  

    The boiled frog syndrome:
    The time to get help is a line that is not always clear as there are a lot of elements of ‘you don’t know what you don’t know until you realize you don’t know it!”.  

    It’s like the boiled frog syndrome?  If you put a frog into a pot of boiling water, that frog would jump straight out.  But if you actually put the frog in a pot of cold water and then slowly turned up the heat, it happens so gradually that the frog does not realise its environment is becoming toxic and ends up being boiled to death.

    Hence, the accountant plays an important role of talking to their clients to help identify when it’s time to hop out of the water and suggest when it’s time to get external help from someone like the dVT Group.  Coming in together to go over the situation and using our expertise in this area, we can assist by quickly summarising the situation and what options and alternatives are available.  Remember… “when something’s broken, it doesn’t get better by itself”.  

    First, talk to your accountant:
    Accountants are in a great position to have these conversations.  They can sometimes be difficult conversations to have as no one likes to talk about failure or be challenged with severe consequences.  The aim is to assist directors to reduce the noise and to avoid it becoming a massive distraction to running their business.

    However, accountants have many clients to service and may not necessarily have the time needed to fully analyse and identify the best course of action with the urgency that is sometimes required.  They should direct them to someone like dVT Group to help them recover and get back in control. 

    We have close relationships with accountants and work with them to help the business owners.  We do not poach clients but in fact they are made more robust which helps not only the client but also the accountant.

    Our success has come from our commitment to getting the right outcomes.  When somebody comes to us our approach is to start with the real issue, identify the alternatives, and work out a practical solution.  We don’t point the finger or criticise!

    If you would like more information, please call Antony de Vries (or any one of our 5 partners) at dVT Group on 02 9633 3333 or if you would like legal advice, please call Joanna Oakey at Aspect Legal on 02 8006 0830 or visit our websites dvtgroup.com.au or talkinglaw.com.au. 

    In the meantime, we hope you take the time to enjoy this podcast (27 mins) and that you obtain some useful tips of how to recognise trouble brewing in business before it’s too late.  Please click on the link below. 

    [EP 036] Recognising Signs of Insolvency Risks Part 2: Top things many business owners and accountants miss

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  • Avoid the risk of insolvency and know what to do when there is a risk of it knocking on your door!

    News Articles

    dVT Group were recently invited to participate in a podcast with Joanna Oakley, Lawyer at Aspect Legal.  It is a two-part series providing insights and advice on recognizing the signs of insolvency and what to be aware of should you find yourself in this situation.

    The main points covered in the podcast are:
    a)  Understanding how time can make the difference when a business is in financial strife;
    b)  The personal risk exposure for directors of businesses;
    c)  Knowing the warning signs of trouble and what questions to ask at the right time.    

    Antony de Vries is the founding partner of dVT Group, which is a specialist accounting and advisory firm and experts in the areas of business turnaround and insolvency.  Over the past 23 years they have helped more than 2,500 businesses overcome their financial challenges and regain the control they desire.   

    The podcast is aimed at all businesses, arming them with information about recognizing signs of financial distress both in their own organization and in the clients who may owe them money.  But it’s also aimed at providing accountants and other professional advisers that work with these businesses some insight as to the warning signals they should be looking out for and what to do if they are seeing some of those troubling signs.

    Business Owners coming through too late!
    Antony says, “The most common and disturbing theme that we see is that business owners come through to ask for help too late.  Australians are actually quite a proud society and no one really wants to put their hand up and say, look I’m just not sure whether it’s getting a little bit too hard for me. But she’ll be right mate, I’ll be able to sort of bat on. We’ll get through this”. 

    It is frustrating to see the damage that can occur when people are unaware of what is slowly happening to their business, especially as these situations could be resolved if they were dealt with early in the piece.  Their options start to evaporate and sometimes they are left with no options at all.

    A success story: turning a business around. 
    In the podcast, you can hear a great success story where we were able to help a business that came to us for help early.  Through the appointment of a voluntary administration process and other actions, the business got out of trouble and 14 years later has a business that is five times in size and with no debt.

    These success stories can only be achieved if the signs are recognised and acted upon early.  Accountants can help by keeping a look out or just simply knowing the conversation starters. 

    By asking a couple of simple questions, the majority of people will most likely be more than happy to talk about their business and would value such an open dialogue.

    The podcast also features a not so successful case study of a good solid profitable business that was starting to experience difficulty following a change in law and serious health problems.   They did not think to ask for help as they did not think anything could be done to change the situation.  It was difficult to hear that the family were left with no business and no money.  This could have been avoided by getting the right advice at the right time, to identify the right pathway to either find the right person to take over the business or to potentially benefit from the sale of the business. 

    Personal risk exposures for directors.  
    Many business owner are aware of their duties as a director, but just don’t fully appreciate that whilst they have this entity that is separate to them in their company, there are still risks for them personally if they continue to trade in a business that effectively is insolvent or seen to be insolvent at a particular point in time. 

    So when does it become a risk for the directors?  Antony says: “When a company can’t pay all its liabilities or all the debts that it incurs whilst running its business it creates a shortfall. The law says that you shouldn’t go and seek money from other people (employees, suppliers for goods and stuff like that) when you don’t have a reasonable chance of knowing that you can actually pay them for that work.  If this is the case and the company goes into liquidation, the directors will become personally liable for any shortfall of all those debts that they allowed to happen and that remain unpaid.

    In reality what happens is the active creditors, suppliers or the employees will actually threaten to withhold their services if they don’t get paid.  This can then result in other liabilities such as taxes to go unpaid.  The director thinks he’s doing the right thing because he is keeping the business running, but in the back of it, he’s just created this sleeping time bomb.  The tax department have given themselves a special rule that says if you don’t fill in your BAS form within three months, the director becomes personally liable.  So in these situations, the onus is on the director to not let these issues accumulate and to obtain the right advice on who to pay and how they are paying, as it can make a difference between personal liability and not. 

    Warning Signs 
    So what are the tell-tale signs of a problem brewing.  Signs that should have business owners or their accountants (on their behalf) starting to ask questions and perhaps thinking about getting external assistance?

    Poor cash flow is probably the biggest indicator – is there enough cash in the bank to actually pay for what you owe, when they’re asking for it.  Some of the questions may be – are you overdue with any of your taxes, are you paying your employees superannuation liabilities on time?

    The second podcast of this series will feature the warning signs of financial trouble, how to recognise them and what to do about them once you see them.

    In the meantime, we hope you take the time to enjoy this podcast (27 mins) and that you get some useful tips about what to do and what not to do if you’re involved with a business that is starting to feel a cash flow crunch. 

    https://www.stitcher.com/podcast/joanna-oakey/talking-law-legit-legal-tips-for-business-with-all-the-jargon/e/51560685

    If you would like more detail about any part of this article or podcast, please contact Antony de Vries at dVT Group on (02) 9633 3333 or Joanna Oakley at Aspect Legal on (02) 8006 0830. 

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