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INDUSTRY: Retail
DEBT: $303,456
PLAN OF ACTION: Small Business Restructure
Background
Retail business focusing on refurbished electronic products in Australia, faced significant challenges, including trading losses, cash-flow issues, changes in supply terms, disputes with a supplier, misappropriation of funds/stock by a former manager, and personal hardships like the sickness and death of a founding Director.
Core problem
Following the passing of a founding Director, the company’s operations became untenable, necessitating a restructure.
The solution
The Director conducted a comprehensive review of the business’s structure and expenses as part of the restructuring process, implementing corrective measures and strategic restructuring to ensure the stability of the Company.
To enhance the business’s stability, profitability and cash-flow, the Company renegotiated an efficient commission structure with the suppliers and customers.
The Director and shareholder introduced some capital and assist with the restructure however the business profitability had now reduced to an amount that it could not sustain the current debt levels or repay debts in full in the mid-term.
We assisted the Director in preparing a restructuring plan, which outlined an estimated return of 20.19 cents to the dollar for creditors.
We engaged with the ATO to communicate the company’s history and efforts for future viability.
The creditors approved the restructuring plan
The outcome – a return to order
The Director was happy about staying in control of the business during the restructure, and with the outcome of the restructuring plan. It provided certainty for the business moving forward allowing the small business to survive.
The company’s debts were reduced to $68,000 and was repaid via thirty-six (36) monthly contributions of $1,888.89.
The Small Business Restructuring (SBR) process proved instrumental in resetting a financially distressed yet viable business, allowing the owners the chance for future success.
For more information on the SBR process and a complimentary guide to small business restructuring, visit Rapsey Griffiths https://rapseygriffiths.com.au/.