13 Dec Australian Subsidiary Company Owned by Foreign Entity
Capability: Insolvency, Restructuring & Turnaround
Industry: Professional Services
Appointment: Voluntary Administration followed by Liquidation
Overview
An Australian subsidiary company that provides specialised property deposit guarantee/bond products to residential property purchasers to replace the need of the initial deposits. The product was underwritten by an overseas insurer that was the parent company in New Zealand. The company had a market share of 80% of the deposit bond market in Australia in a highly regulated industry.
Challenges
The subsidiary and its parent company had hundreds of partners, thousands of customers and over $10m guarantee bonds exposure. The parent entity was placed into provisional liquidation by the overseas High Court without warning which in turn placed the subsidiary’s business operation and guarantee risks in immediately jeopardy. It also exposed the subsidiary’s directors to potential insolvent trading risks and other breach of directors’ duties.
Solution
The subsidiary sought the immediate appointment voluntary administrators after the winding up order of its parent company to avoid potential insolvent trading risks.
The Administrators have traded the business in a limited capacity, continued to employ the staff to manage the partners and customers concerns and enquiries. At the same time, the administrators also seek to sell the business to interested parties internationally. The Administrators managed the relationships with the stakeholders, managed the guarantee risks exposures, and sold the intellectual property of its subsidiary and generated a dividend to creditors.
How Greengate Advisory can help
Sometime, external factors can get out of hands and surprise you, Greengate Advisory can assist in managing relationships with the stakeholders, develop and implement restructuring strategies and avoids the destruction of the SME’s enterprise value, all in short notice.
When time permit, Greengate Advisory examines all options available for businesses by reviewing trading performance and considering non-financial factors to improve all stakeholders’ positions.
