Case Study: Sophie’s NDIS Companies – Complex Restructuring, Liquidation, and Bankruptcy
The Situation:
Sophie came to LemonAide with multiple NDIS companies in financial distress, owing money to secured creditors and the ATO.
The Challenges:
- Creditors statutory demand from the ATO for $987,175.95 against one company
- Total ATO debt exceeding $2 million across three companies
- Personal guarantees on secured creditor loans exceeding $300,000
- Directors owing money to each of the companies totalling $751,564.36
- Unresponsive co-director (Linda) who may have left the country
- $85,000 of company funds used to purchase another company
LemonAide’s Approach:
- Assessed the viability of the businesses without debt
- Restructured Sophie’s businesses into new Pty Ltd companies
- Ensured funds were returned to the company being liquidated
- Introduced Sophie to a lawyer to sue her own companies for outstanding amounts
- Properly valued and sold Sophie’s property equity to her husband Matt
- Guided Sophie through personal bankruptcy process
The Outcome:
- Businesses restructured with Sophie’s husband Matt at the helm and Sophie as manager
- Companies now debt-free and profitable, with turnovers exceeding $801,427.14 and $129,135.36 respectively
- All company BAS’s and suppliers paid on time with monthly profits generated
- Sophie and Matt continue to live in their home
- Sophie discharged over $2.3 million of debt through bankruptcy
- Preserved the core business operations and assets
Key Takeaways:
- Complex business structures require comprehensive restructuring strategies
- Personal guarantees can lead to significant personal liability
- Proper restructuring can preserve valuable business operations
- Bankruptcy can provide a fresh start when personal debts are insurmountable
Facing complex business and personal debt issues?
