Creditor Arrangement

A furniture manufacturer owed a considerable sum of money to its largest supplier. After managing their accounts receivables poorly, the furniture manufacturer had a discrepancy in collections, causing cash flow problems. Australian Debt Solvers organised a payment plan so that the business could resume trading with their suppliers.
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The supplier had enough of waiting to be repaid and engaged debt collectors in pursuing the debt in full. There was no way the company could pay the debt in full. If the debt collector pursued the debt in full, the company would have had to be liquidated and the creditor would not have received anything because there was a secured creditor that would have eaten up all equity into this business if it was shut down.

We identified the above issues and prepared a report for the creditor explaining the consequences if the debt collector pursued the debt to its full extent, which would have been to have the company wound up.

We laid out the full financial position and different scenarios in a report. We then made a suggestion of entering into a payment plan over twelve months, in addition to the company staying within its normal trading terms with the supplier.

The creditor accepted the payment plan. It could not afford to risk getting no return if the company ceased and also lose one of its major customers.