If you feel like your finances are getting out of control, it’s a good idea to pause and take stock of your situation. The best solution for avoiding insolvency and preventing personal bankruptcy depends entirely on your situation and how soon you take action.Following these five key business due diligence points could help you stay in business. An Independent Assessment Too often business owners are so involved in their company they can’t see the wood for the trees. Your accountant or business advisor can provide an independent assessment of your company and suggest options. You may need to consider downsizing, restructuring, asset sales, or improving systems and processes. Seeking outside help might prevent you from going down the road to…

If you’re having trouble paying bills, suppliers and staff, bankruptcy is not the easy way out. Lets take a close look at your options and how you might be able to turn things around. Financial difficulties can arise from bad luck as much as bad management. In the construction industry for example, the main creditor might be paid for a large building project, but the painter or decorator will only be paid at the end of the job which can cause flow-on effects and real financial hardship. Yes, being declared bankrupt will clear most of your debts and get your creditors off your back, but you will still be responsible for Court ordered fines, as much repayment as is possible,…

If you’re wondering whether to sell part of your business or start winding it down you should ask yourself one question: would selling a portion of my business increase the value of the part I retain. Here are some scenarios where the answer might be ‘yes. Enables Expansion Would a cash injection from a partial business sale allow you to buy the equipment or hire staff needed in order to expand? Through expanding and reaching new markets, the part of the business you retain could be worth more than the existing business. Create Value Could selling part of your business create synergies that would add value for the portion you retain? Grow Revenue Is there an opportunity for the investing…

It is apparent from Court decisions in recent years that there are risks involved for directors who become involved in a company whose business is outside their areas of expertise or knowledge and who rely on the advice of others. Directors will be held to account if they breach their duties irrespective of whether they are a director involved in the day to day operation of the company or a passive non-executive director.  The case of FXHT Fund Managers Limited (In Liquidation) and Anor v Dirk Oberholster was heard in the High Court in December 2008 and involved Peri Finnigan and Boris van Delden of McDonald Vague as the liquidators of FXHT.The proceedings, taken by the liquidators, alleged breaches of director’s…

Being the Director of a company looks good, it's prestigious, and looks good on business cards. But it’s not all glamour and cocktail parties. By becoming a company director, you are exposed to the business’ risks and responsibilities that go with a directorship. If business isn’t going so well, when is trading-on an option and when do you run the risk of breaching director duties? First and foremost, look at the Companies Office director requirements. If continuing to trade will end with you filing for bankruptcy, you’ll lose the ability to be a company director for three years. You can be discharged from bankruptcy after three years, but court orders can still prevent you from running a business. How are you managing your insolvency…

The “Decision Maker” could be the most crucial role within an organization. Even if you have advisors who help with the process, the final decision rests with you. Chances are, you’ve seen colleagues make decisions you predicted would land somewhere between bad and worse; and we're guilty ourselves. While comparing Darwin’s Theory of Evolution to business success, author Leon C. Megginson said "It is not the strongest that survive, nor the most intelligent. Rather it is those who are most responsive to change." Having a company in financial trouble is an owner's worst nightmare. With that in mind, here are four cautionary tales of bad business decisions. 1. Overconfidence All businesses need confident leaders, but it takes humility to read the writing on…

New Zealand is a major player in world dairy markets; the world relies on our milk, whole milk powder, butter and cheese. Since 2003 with the fall of the NZ Dairy Board and the rise of Fonterra, the whole industry has undergone massive change, driving some farm receiverships, followed by intensive growth. So why are many farmers now feeling the pinch, while the price of milk at local supermarkets rises? It’s easy to blame the falling milk solids price on European and North American dairy subsidies and overproduction. By the end of 2015, an extra two billion litres of milk from cows across the EU flowed into already flooded markets. Is the answer therefore simply about supply and demand? Fonterra operates in a highly…

New Zealand is experiencing a building boom. Huge housing demands in Auckland and Canterbury should see builders set for at least ten years. Why then are more construction companies going bust and declaring insolvency or facing liquidation? Over 100 rebuild related firms have gone belly-up in Christchurch since the February 2011 quakes, collectively owing $35 million! Mainzeal, Tribeca, and Valiant homes will be familiar names if you read Auckland liquidation notices. In both cases, the problems facing the construction industry seem to fall into one of two camps: 1. Companies expanded far too rapidly as they expected a windfall slice of the boom. After the earthquakes and big housing announcements from the government lots of companies started taking on extra…