Project Delft relates to the restructuring of a business in the disability services industry where GM Advisory provided the director with options and support to achieve a successful outcome.

Background

The company provides support workers and nursing care within metropolitan and regional Queensland.  As a National Disability Insurance Scheme (NDIS) registered provider, the company not only provides nursing and support but also had commenced providing education and training for professional team members at the time it entered restructuring.

The Company suffered (but survived) difficult operating conditions during the Covid period.  On top of significant supply issues, cost increases, and a margin squeeze, the business suffered interruption when staff came in contact with or contracted Covid themselves – with lengthy exclusion periods.  Despite this, the Company continued to pay staff entitlements and made ATO lodgements on time. 

With the backdrop of covid, the company encountered further challenges.  For example, the Company had commenced developing an online training website which cost much more than budgeted – but despite the tough conditions – the business had no choice but to see the development through – given the time and money already invested.

Heartbroken, the team also had to return to the program some participants whose plans were not paying to hospitals, as the Company could not sustainably provide care.

What Could be Better?

Together with the professional advisers, the business owner and the staff focused on cost reduction and cash flow improvement, including expanding services where possible and reducing overheads. 

Employing 58 staff, the company was and is committed to both its staff and clients and made this central to their thinking and overall business plan.

The Restructuring Plan

In liquidation, the employees would be terminated, and they would likely need to access the Fair Entitlements Guarantee Scheme (“FEG”) to obtain their employee entitlements (Annual Leave & Payment in Lieu of Notice).  Due to the nature of liquidation, there would have been no return to creditors.

The company offered to pay 25.3 cents in the dollar over 12 months, and the creditors, (the largest of whom was the ATO), who accepted the proposal.  Within 3 months, the director had taken out a personal loan and paid the compromised debt under the Plan in full.  The Company was returned to normal status and continued to trade.

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