Overview
Olvera Advisors was appointed as administrators of Sydney Arbor Trees, a reputable Sydney-based arborist business. The client specialised in tree management, maintenance and consulting for residential and commercial properties.
Our objective was to maximise debtor recoveries and preserve value through the protection and assignment of profitable client contracts.
Challenges
- Poor liquidity: The company faced liquidity issues due to COVID-19 and a number of loss-making fixed contracts.
- Poor funding: The business could not obtain additional funding to support the business’s working capital needs.
- Repayment Issues: Directors faced heavy reliance on and payments to a related party from which their equipment was leased.
- Debts: Directors face significant ATO debts, with a Director Penalty Notice issued. There was also pressure from multiple creditors.
Turnaround Plan
Olvera Advisors immediately conducted an urgent financial assessment and prepared a cash flow forecast to guide directors on their short-term trading position. Our Administrators had sufficient cash to trade business for no more than 2 weeks while running a concurrent sale of business campaign.
During this period, Olvera engaged closely with key stakeholders, such as secured creditors, employees, and customers, to ensure their ongoing support and stability. We also prioritise recovery of both pre- and post-appointment debtors, alongside the advertising and negotiation of a potential sale.
Results
We successfully continued business trading during administration, which allowed directors to recover their debits and the assignment of contracts. These actions resulted in the first-ranking secured creditor being paid in full, along with a dividend to employees.
Overall, our involvement resulted in a better outcome compared to an immediate wind-up.
Key Drivers of Success
- Immediate action: We acted quickly to stabilise Sydney Arbor Trees through a focused short-term trade-on strategy. By engaging directly with key stakeholders, we built the confidence needed to keep operations running and protect the value of ongoing contracts.
- Skilled debt recovery: Rigorous cash management and proactive debtor recovery was applied throughout the administration period. Our team worked hands-on to recover funds and improve liquidity, ensuring the business had the financial breathing room to continue trading.
- Preserving trust and value: We maintained open communication with Sydney Arbor Trees’ clients, preserving relationships built over years of reliable service. With their consent, we successfully assigned key contracts, securing continuity for customers and value for creditors.
Key Takeaway
This case study highlights how early and immediate action can lead to a better outcome. By maintaining limited trade and preserving contract value during administration, Olvera Advisors delivered a good result for creditors and employees over immediate liquidation.
