19 Sep Restructuring an NDIS Provider with More Than 60 Employees and 100 Participants
Capability: Restructuring & Turnaround
Industry: NDIS / Disability Services
Appointment: Voluntary Administration / Deed of Company Arrangement (DOCA)
Overview
Greengate Advisory restructured an NDIS provider with more than 60 employees and over 100 participants through voluntary administration and a deed of company arrangement (DOCA). As a result, the business continued under the control of its directors, subject to the DOCA.
Challenges
- More than $2 million owed to the ATO
- About $700,000 in unpaid superannuation
- About $400,000 in Part 7 penalties and interest
- A director penalty notice had been received
- More than 100 participants and over 60 employees relying on the business continuing
Greengate Advisory’s approach
Patrick Loi and John Chand were appointed voluntary administrators of the company. After the appointment, we assessed the company’s position and worked with the directors on a restructuring proposal for creditors to consider.
What is a deed of company arrangement (DOCA)?
A deed of company arrangement (DOCA) is a binding agreement between a company and its creditors that sets out how the company’s affairs will be dealt with. It is proposed during a voluntary administration and, if creditors vote in favour, it can allow the business to continue rather than be wound up. ASIC explains how a deed of company arrangement works for creditors.
Funding the DOCA from trading profits
Instead of relying on a lump sum, the DOCA used the company’s future trading profits to fund the return to creditors. Therefore, the business could keep operating while it made the payments required under the deed.
Outcome
- Priority employee entitlements, including superannuation, were paid in full
- Unsecured creditors are expected to receive about 10 to 20 cents in the dollar
- Control of the company was returned to the directors, subject to the terms of the DOCA
How Greengate Advisory can help
If your business has significant ATO debt, unpaid superannuation or has received a director penalty notice, a voluntary administration and deed of company arrangement may allow it to keep trading. Smaller businesses may also consider small business restructuring. Read our voluntary administration guide or contact us for a confidential discussion. We can explain the options in English, Mandarin or Korean.
