Welcome to our Case Study Of The Month, showcasing clients who have enlisted our help to turn their business around. This Case Study focuses on a Sydney Retail Electrical Shop where we worked through a Winding Up Application, Business Restructure and Voluntary Administration. We devised a plan that saw creditors paid, the company continue trading and debt significantly reduced. Read how we made this happen.
|Service||Winding Up Application
My Business Path worked closely with the business to see
- debt reduced from $717,000 to approximately $108,000
- creditors make their money back with debts serviced
- cashflow unaffected
- a Deed Of Company Arrangement drafted and carried out
- business continue trading
- systems set up for a viable future
My Business Path's role in relation to the business was to
- move efficiently and action within a matter of days
- arrange a halt on the Winding Up Application immediately, seeking adjournment to push the hearing date back
- place the company into Voluntary Administration to counter act against the Winding Up Application
- work alongside Administrators to reduce debt down to $108,000
- draft a DOCA that didn't affect cashflow and business trading while setting up an affordable payment plan
- negotiate with creditors and steer them away from Voluntary Liquidation
- set up systems to avoid returning to the previous financial difficulties through a Business Restructure
The Financial Situation
In this Case Study, this Sydney Electrical Retail Shop came to My Business Path
- facing a Winding Up Application and debt of $717,000 owing
- with creditors facing losing the debt amount should the company go under
Challenges Facing The Industry
Australian bricks and mortar retailers face a variety of challenges in business; ranging from competing global players to well-established international players in the luxury retail market entering the picture, competing scaled online ecommerce stores, and moderate growth in overall national sales. With the Government introducing their infamous ebay Tax to introduce GST charges for purchases under $1,000, the corporate tax demands for online behemoth Amazon also looms for the July 1 deadline. The subsequent fallout with Amazon's kneejerk reaction announcing plans to stop shipping to Australia as a result has caused some relief among retailers - particularly with Harvey Norman already laying claim to victory. While Amazon are exploring blocking Australia-based shoppers from its main website rather than comply with the GST on online purchases of less than $1000, reports are reminding online shoppers they may still have the option of buying from Amazon Australia. The next few weeks are sure to present intriguing retail ping pong games with consumers watching the back and forth with interest, continuing to place the retail sector on never-ending shaky grounds.
While David Jones and Myer continue to struggle - amid rumours of a possible merger - the Australian retail market is saturated with options. The results mean fierce and highly-concentrated competition, forcing wars in price-cuts, low profit margins, struggles with managing cashflow, and the constant need to update ecommerce technology; all alongside increasing labour costs and surges in utilities. It's a great market for shoppers but not necessarily so for bricks and mortar businesses who require strong operating and finance systems and sustainable cashflow to continue trading.
The people are real. The businesses are real. My Business Path designed tailored solutions that worked.
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