13 Dec Australian Subsidiary Company Owned by Foreign Entity
Capability: Insolvency, Restructuring & Turnaround
Industry: Professional Services
Appointment: Voluntary Administration followed by Liquidation
Overview
The company was the Australian subsidiary of a New Zealand insurer. It offered deposit guarantee (deposit bond) products to residential property buyers, so they did not need to pay an initial deposit in cash. Its parent company underwrote the product. The company held 80% of the Australian deposit bond market, in a highly regulated industry.
Challenges
The subsidiary and its parent had hundreds of partners, thousands of customers and more than $10m in guarantee bond exposure. Without warning, a New Zealand High Court placed the parent into provisional liquidation. This immediately put the subsidiary’s business and its guarantee exposures at risk. It also exposed the subsidiary’s directors to possible insolvent trading claims and other breaches of directors’ duties.
Solution
After the court ordered the parent company to be wound up, the subsidiary immediately appointed voluntary administrators to avoid insolvent trading risks.
The administrators traded the business in a limited way and kept the staff on to handle partners’ and customers’ concerns. At the same time, they looked for international buyers for the business. They managed relationships with stakeholders and the guarantee exposures. Finally, they sold the subsidiary’s intellectual property and paid a dividend to creditors.
How Greengate Advisory can help
Sometimes outside events move quickly and take a business by surprise. At short notice, we can help you manage stakeholder relationships, develop and carry out a restructuring strategy, and protect the value of the business.
When there is time, we review trading performance and non-financial factors to find the options that improve every stakeholder’s position.
Read more: our guide to voluntary administration.
