When private businesses or trusts are involved in a family law dispute, the right business valuation can be the difference between a smooth resolution and a drawn-out conflict. For negotiations, for the court matters, and most importantly for your client, having a reliable valuation is critical.

As a company director, your role goes beyond oversight—you are responsible for safeguarding and growing the value of the business. A professional business valuation is a powerful tool that helps you lead with clarity, make informed decisions, and protect shareholder interests.

When ownership interests in a legal practice changes hands, stamp duty can become a key consideration. In Queensland, the Queensland Revenue Office requires the value of “goodwill” and other dutiable property of the practice to be determined. This makes the process of valuing a legal practice not only important but also highly specialised.

In the dynamic business landscape in Australia, legal expertise is essential for navigating regulatory requirements, protecting assets, and resolving disputes. Whether you're a startup, a growing enterprise, or an established corporation, working effectively with lawyers can be a game-changer for your business success (or survival).

This is the twelfth topic in a series of articles aimed at informing directors of their duties and options for small to medium enterprises (SME) if faced with insolvency. The article deals with the engagement of a lawyer.

Understanding Voidable Transactions in a Liquidation

The Corporations Act 2001 plays a crucial role in regulating business activity in Australia. One of its key functions is to prevent fraudulent or unfair business practices, especially during times of financial distress. Among its most important provisions are the rules concerning voidable transactions.

These are transactions that a company has made but may be undone (or “avoided”) by a liquidator if the company goes into liquidation. In simple terms, voidable transactions are like "bad deals" that can be reversed when a company is in trouble, but only under specific conditions.

These voidable transactions laws matter as they protect the rights of creditors, ensuring that companies do not make rash or unfair decisions right before they collapse. If left unchecked, a few creditors could take advantage of a struggling company, leaving others with nothing.

WCT Advisory is thrilled to announce the expansion of our capabilities with the merger of the former Bentleys QLD Advisory Team, led by Tracy Knight, as of 1 November 2024.

With this collaboration, our clients now benefit from a strengthened service lineup, helping them navigate complex financial, legal, and strategic challenges with greater depth and expertise.

A voidable transaction is a transfer of property or assets owned by the debtor to a third party that causes detriment to creditors. By voiding these transactions, a Trustee can recover assets that would otherwise have been available to creditors, ensuring an equitable distribution of assets to all creditors.

Under the Bankruptcy Act 1966, there are five primary transactions which may be voided by the Trustee. These include:

• Section 120: Undervalued transactions

• Section 121: Transactions to defeat creditors

• Section 121A: Transactions with consideration to third parties

• Section 122: Unfair Preferences

• Section 128B and C: Superannuation contributions made to defeat creditors

There is no strict definition of what informal restructuring is, however, quite simply it is the process of turning around the financial results of a business.

Unlike one of the formal restructuring processes set out in the Corporations Act (like scheme of arrangement, voluntary administration and deed of company arrangement, safe harbour or new small business restructuring process), the directors remain in control of the business whilst steps are taken to explore and implement a variety of strategies to return the business to a viable and sustainable operation.

The Company will often engage an external consultant to discuss the situation and seek guidance on the options available and how to implement same.

Some restructuring techniques might include:

• Divestment (e.g. sale of certain assets or parts of the business).

• Rationalisation of operations (e.g. costs, revenue, business processes, termination of non-performing contracts and employees etc.).

• Financing – refinancing of existing facilities, new debt or equity funding.

• Changing the legal structure.

WCT Advisory is a specialist financial advisory firm primarily concentrating on advising company directors and business owners when facing financial distress, as well as undertaking formal insolvency appointments. In addition to that primary focus, the firm also undertakes some corporate finance engagements including capital raising, due diligence and transaction advisory.

After 4 years, WCT Advisory now have offices in both Brisbane and Adelaide with three main service areas:

• Restructuring Advisory

• Insolvency

• Corporate Finance

Andrew Weatherley provided commentary on the Courier Mail and The Australian Articles by Glenn Norris and Chris Herde. In particularly the 23.5 per cent spike in company insolvency numbers over the past year in Queensland and the expectation of that continuing.

He also provided some commentary this afternoon to 4BC's Drive Program with Peter Gleeson around the increased insolvency numbers, some expectations for FY2023 and some simple advice for small business.

Brand protection is a critical aspect of any businesses operations as it ensures the long-term success and reputation of your company. Unfortunately, insolvency can pose significant challenges to brand integrity and sustainability – especially in the current climate of high interest and rocketing inflation.

Andrew Weatherley spoke on a recent podcast episode of Business Built Freedom, where he had a great chat with Joshua Lewis (Managing Director of Dorks Delivered) on business restructuring, cash flow, and working capital tips. 

Specifics covered include preparing a cash flow forecast, how to manage working capital, restructuring and mitigating risks.