Company Six – National Landscaping Business



Company Six operated a Landscaping and Ecological Restoration business for approximately 12 years prior to it running into financial difficulty ultimately leading to it being placed into Voluntary Administration.

As with any new matter, the first task upon taking on a new appointment is to gather enough information to properly understand the Company’s structure, business issues and processes, strengths and weaknesses as well as to update our understanding of the relevant industry. In this case it was interesting to grasp the peculiar factors that impact a landscaping business which seeks to operate with a significant and strict ecological focus. Most pleasing in this matter which were stabilised early was the attitude of its employees and most importantly the willingness of its Management to cooperate with the Administrator in achieving rapid change and working toward a successful outcome for all parties involved.

Trade on:

Initially we assessed the financial/cash flow position of the Company to determine the viability of being able to continue to trade the business in a practical and safe environment. The Company had a history of trading reasonably well but unfortunately an interstate expansion did not go as smoothly as expected by the Company and effectively began the Company’s demise. Its Management attempted to correct these issues by seeking to sell the new interstate operations however; having left it too late the Purchaser began to sense that the Company was under strain and saw an opportunity to get a better price. Consequently the Company struggled as long as it could prior to making a formal appointment.

Placing the interstate operations quickly into a state where the status quo could be maintained, negotiations were reopened with the potential purchaser. Whilst the potential of the original offer was now extremely unlikely the momentum needed to be regained so as to minimise potential claims for projects that would not be completed without a sale. Consequently a sale was negotiated with a minimum cash component but the removal of significant liabilities in the form of some suppliers, potential claimants and equipment lease payments thus enabling a greater return to remaining creditors from the remaining assets.

Thus the remaining business arms were now the Company’s major assets. Consequently it becomes necessary to preserve the value of the overall business rather than just the individual component assets, therefore the decision was made to continue to trade the business and analyse the alternatives between trading out from internally generated profits or alternatively a sale at the best possible value which would ultimately benefit creditors.

When dealing with the decision to continue to trade an insolvent entity an Appointee must consider many issues, two of the most important are:-

1. Cash flow:

Always an extremely important aspect of the financial management of a business, cash flow management and the assurance that future cash requirements are met become life critical to the Appointee. The Appointee must critically ensure that they can meet the trading expenses they incur on the same terms that have been agreed with suppliers. In this case, with the close cooperation with Company staff, the Appointees staff took over the cash flow management and budgeting freeing senior staff to focus on the onsite job management as well as cash collection and the Director to focus on the day-to-day operations.

2. Risk Management:

Risk mitigation is actually greater for an Appointee than it is for an ordinary Director due to higher levels of expectation by both Courts as well as the regulators. An Appointee is required to identify, examine and mitigate relevant Work Health and Safety as well as business risks to minimise any unfortunate events occurring. To ensure the timely and correct identification and addressing of risks in this Administration steps were taken to conduct a detailed review of all aspects of the Company’s operations which was done in conjunction with the Director and other Company staff. Involving the staff is a better way to hopefully minimise risks that they are already aware of or have plagued the business previously. Once the review was conducted an ongoing process of monitoring was established involving the majority of the parties involved.


During the process of the administration, it was necessary to deal with a large number of Creditors not only in relation to pre-appointment outstanding amounts but also for the provision of ongoing supplies during the trade-on period of our control. Critical to success in this area is the ability to build substantive and meaningful relationships with these Creditors quickly. We as a Firm have found a frank, honest and friendly approach has always provided the best platform from which to deal with these Creditors. Needless to say, successful debtor-creditor relationships spring from mutual cooperation and honouring such relationships has always been one of our priorities when administering both entities and individuals.

It is also critical to understand the importance of commercial decision making in such appointments, including the agreeing to certain adjustments with the Debtors, making payments as required and when absolutely necessary the termination of employees, etc. Decisions must always be timely, equitable, reasoned and documented.

In this matter, we were also required to deal with specific Queensland Legislation, namely the Building and Construction Industry Payment Act 2004 and Subcontractors Charges Act 1974 (QLD) which secures certain suppliers (including Subcontractors) of a Contracting Company in respect to the payment of outstanding amounts from proceeds paid by the ultimate customer or head Contractor. This essentially means that these suppliers have a right to be paid before the Contracting Company for the work they have done in respect to that contract. As one may appreciate, there were a number of Queensland suppliers that remained unpaid at the time of our appointment.

To advance the process it became inevitable to make a commercial decision to facilitate the Debtors payment of the Suppliers directly for these amounts thus assisting to ensure the ultimate payment of the balance to the Company. The timely resolution of this issue ultimately saw not only these suppliers willingness to continue to provide supplies to the Company but also prevented the unnecessary erosion of the Company’s assets in unnecessary legal fees. The Creditors benefit from this was that such supply lines were not broken, contracts were retained, costs minimised, customers paid more promptly and thus returns would ultimately be maximised.


Sale of the Remaining Business:

Regrettably it became clear that whilst profitable it would not be practical to have the Company trade out of its debt position, therefore sale of the business became the ultimate solution. Thus at a Meeting of Creditors, the Company was placed into Liquidation rather than continuing to incur unnecessary costs.

Once decided we immediately initiated a Sale of Business campaign shortly after the Liquidator’s appointment.

We have found a protracted and delayed sale can have a detrimental effect on the Company’s business, its staff and therefore its value and perception in the industry. With this in mind a quick sale process was adopted in order to achieve the best possible price for the Company as well as minimising the impact on its ongoing operations.

With the sale of the business the winding up of the Company involved administration and statutory processes as well as the collection of residual payments such as book debts, retentions and sale of miscellaneous assets not included in the sale.


The first critical point to note is that it is imperative that things are not left too late. In this instance the decision to take corrective action was not taken early enough thus preventing a more profitable sale of assets, the Interstate Operations, and the possibility of a trade out rather than a sale. Preservation of value must be the key, regrettably too many people focus on self-interest rather than their corporate responsibility and happily in this case it was the corporate function that was always paramount but regrettably decisions taken too late.

Additionally the overall planning, organisation and time driven action plan has resulted in a solution that will provide a return to Creditors. Meaning that the priority claims in this Administration will be paid in full and it is anticipated that after meeting administration expenses, though not in full, the ordinary Unsecured Creditors will be paid a return from the winding up of the Company which would not have occurred without the actions detailed above.