Understanding debt restructuring
Here, we’ll discuss debt restructuring options and how AVA Advisory can provide you with guidance and support throughout the process.
Informal debt negotiation
One of the first steps in addressing financial difficulties is to engage in informal debt negotiation with your creditors. This involves reaching out to your lenders and suppliers to discuss potential modifications to your repayment terms. These modifications may include:
- Extending repayment periods
- Lowering interest rates
- Partial debt forgiveness
- Debt consolidation
Informal debt negotiation can be a viable option if your business is facing temporary cashflow issues but has a sound long-term outlook.
However, it’s essential to approach these negotiations with a clear plan and a realistic understanding of your financial situation.
Formal debt agreements
If informal negotiations are unsuccessful or your financial situation is more complex, you may need to consider entering into a formal debt agreement.
Under Australian law, a debt agreement is a legally binding arrangement between a debtor and their creditors, administered by a registered debt agreement administrator. A debt agreement can provide several benefits, including:
- Consolidating debts into a single, manageable repayment plan
- Preventing creditors from taking legal action against your business
- Protecting your personal assets from being sold to repay business debts.
It’s important to note that entering into a debt agreement can have long-term consequences, such as a negative impact on your credit rating.
Voluntary Administration
In more severe cases of financial distress, “Voluntary Administration” may be the best course of action.
Voluntary Administration involves appointing an administrator/s to take control of your business and assess its financial situation. The administrator will work with you, your advisers and your creditors to develop a plan for restructuring your debts and, if possible, saving your business.
During Voluntary Administration, your business is protected from legal action by creditors, giving you breathing room to focus on the restructuring process.
The ultimate goal of Voluntary Administration is to give your business the best chance of survival while also protecting an owner/director from insolvent trading claims – if initiated early and with the right advice from a professional insolvency specialist.
How AVA Advisory can help
Navigating the complexities of debt restructuring can be overwhelming, especially when you’re already dealing with the stress of financial challenges. This is where our expertise is invaluable. Our team of experienced debt restructuring professionals can:
- Assess your business’s financial situation and provide expert advice on the best course of action
- Negotiate with creditors on your behalf to achieve the most favourable outcomes possible
- Develop and implement a comprehensive debt restructuring plan
- Provide ongoing support and guidance throughout the restructuring process.
By engaging AVA Advisory, you can benefit from our deep understanding of the Australian business debt landscape and our proven track record for helping directors and owners of SMEs across Australia overcome financial challenges.
If your small business is facing financial difficulties, it’s crucial to act quickly and seek professional advice.
Remember, there is no shame in seeking help when your business is struggling. Our goal is to help you regain control of your finances, protect your assets and set your business on a path to long-term success. Call 1300 181 220 or book a cost-free, obligation-free consultation through our website.
