Glossary
Navigating business challenges often means encountering complex financial and legal terms. We’ve created this comprehensive guide to help you understand the language used in corporate advisory and restructuring.
Whether you’re exploring options for business recovery or seeking to better understand your financial position, this glossary breaks down key terms into clear, practical explanations. We’ve organised them by category to make finding specific information easier.
Remember, while understanding these terms is important, you don’t have to navigate financial challenges alone. Our team at AVA Advisory is here to provide both the expertise and support you need to move forward with confidence.
Corporate Advisory and Restructuring
A strategic process of reorganising a company's operations, finances, or structure to improve performance and ensure long-term viability. This might involve changing business models, renegotiating debts, or streamlining operations.
Professional guidance provided to businesses on financial, operational, and strategic matters. This includes help with restructuring, growth strategies, and managing financial challenges. AVA Advisory offer a range of corporate advisory services.
The process of changing the terms of existing debts to make them more manageable. This might include extending payment terms, reducing interest rates, or converting debt to equity.
Professional guidance for businesses showing early signs of financial stress. The goal is to explore options and take action before formal insolvency becomes necessary.
A formal debt restructuring process designed specifically for small businesses with liabilities under $1 million. It allows eligible companies to restructure debts while continuing to trade. AVA Advisory assists small businesses with the SBR process.
The process of helping struggling businesses recover and return to profitability through strategic changes to operations, finances, and management practices. AVA Advisory offers a variety of restructure and turnaround services.
Professional guidance for businesses showing early signs of financial stress. The goal is to explore options and take action before formal insolvency becomes necessary.
Insolvency processes
A formal process where company directors choose to wind-up an insolvent company. A liquidator sells assets and distributes proceeds to creditors according to legal priorities. We have experienced liquidators on the AVA Advisory team.
A binding agreement between a company and its creditors that sets out how the company's affairs and assets will be managed to maximise returns to creditors. Our team are experienced in providing advice on DOCAs.
When an independent insolvency practitioner takes control of a company to investigate its affairs and protect creditor interests. This includes voluntary administration and liquidation.
When a company continues to operate and incur debts while unable to pay them when due. Directors can face personal liability for debts incurred while trading insolvent.
A streamlined liquidation process for small businesses with liabilities under $1 million, reducing costs and complexity compared to traditional liquidation. AVA Advisory is experienced helping businesses with the simplified liquidation process.
A formal process giving struggling companies breathing space from creditors while an independent administrator assesses options for business survival or orderly wind-down. AVA Advisory have helped many businesses with the VA process.
Legal and Compliance
The Australian Securities and Investments Commission - Australia's corporate regulator that oversees company registrations, corporate compliance, and financial services.
The main law governing corporations in Australia, including rules about company operations, director duties, and insolvency processes.
Legal obligations directors must follow, including acting in the company's best interests, avoiding insolvent trading, and maintaining proper financial records.
When directors become personally responsible for company debts, which can happen through insolvent trading or personal guarantees. This is where our personal asset protection service comes in handy.
Legal protections that shield directors from personal liability for insolvent trading while they develop and implement a structured turnaround plan. The AVA Advisory team can advise you on safe harbour.
Formal demands for payment of debts over $2,000. Companies have 21 days to pay or reach an agreement before creditors can start wind-up proceedings.an independent administrator assesses options for business survival or orderly wind-down. AVA Advisory have helped many businesses with the VA process.
A formal notice indicating that a creditor has applied to court to have your company placed into liquidation due to unpaid debts. We’ve published a guide on wind-up notices.
Tax and Financial
A formal notice from the Australian Taxation Office about unpaid tax obligations. The ATO uses a colour-coded system (blue, orange and red letters) to signal increasing urgency, with each level requiring progressively faster action. These letters outline specific tax debts, deadlines and options for resolution. We’ve published a guide about these warning letters.
A notice from the ATO making directors personally liable for certain company tax debts, including PAYG withholding and superannuation guarantee charge. We’ve published a guide on DPNs.
A formal notice from the ATO requiring third parties (like banks or debtors) to pay money they owe your business directly to the ATO. We’ve published a guide on garnishee notices.
Pay As You Go withholding tax that employers must deduct from employee wages and remit to the ATO.
A tax penalty imposed when employers fail to pay the correct amount of superannuation for eligible employees by the due date.
Money owed to the ATO, including income tax, GST, PAYG withholding, and superannuation guarantee charge.
Business roles and structures
An independent insolvency practitioner appointed to take control of a company during voluntary administration.
The person appointed to oversee a deed of company arrangement, usually the former voluntary administrator.
A person formally appointed to manage a company's business activities and make key decisions about company operations.
An independent insolvency practitioner appointed to wind up a company's affairs, sell assets, and distribute proceeds to creditors.
An insolvency practitioner registered with ASIC to conduct formal insolvency appointments like liquidations and voluntary administrations.
Small Business Restructuring Practitioner - a registered liquidator who helps eligible small businesses restructure their debts under the SBR process.
Creditor related
A person or entity that has lent money to a company with a security interest over specific company assets (such as property, vehicles or equipment).
A person or entity that has provided goods, services or loans to a business without obtaining any security interests over company assets (like suppliers or contractors).
Creditors who receive payment priority in liquidation, including employees for wages and entitlements.
A formal document that creditors submit to prove the amount a company owes them in an insolvency process.
A creditor who has a close connection to the company, like directors, their relatives, or related companies.
An independent creditor with no close connection to the company or its directors.
Financial indicators
A key test for determining company solvency by assessing whether it can pay debts when they fall due.
When a business struggles to meet financial obligations due to cash flow problems or excessive debt.
When a company cannot pay all its debts when they fall due - a key trigger for formal insolvency processes.
A company's ability to pay all its debts when they fall due.
Continuing business operations when a company cannot pay its debts, which can lead to director liability.
The difference between current assets and current liabilities, indicating a company's ability to fund day-to-day operations.
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