Tom Murray, tutor on the upcoming Chartered Accountants Ireland Diploma in Insolvency explains how company Turnaround is one of the critical skills and functions of the Insolvency practitioner.
"Core to our philosophy is that a viable business should be saved where possible" says Tom Murray - partner at Friel Stafford Corporate Recovery. Murray is a tutor on two modules of the Diploma in Insolvency and will address both Company Turnaround and Members Voluntary Liquidations.
"During the Celtic Tiger, Corporate Recovery and Insolvency was an area which was not in vogue and as a result there is a knowledge gap in the accounting profession save for the few specialist firms who concentrated on this area all along". For this reason Murray believes that the new diploma from Chartered Accountants Ireland is an exciting and much needed development.
Knowledge the key for advisors/accountants
While Insolvency is a specialist area, many accountants in both large and small practices may well find themselves called upon by clients experiencing difficulty to advise as to their options. Murray explained that his experience of dealing with liquidations and insolvencies of firms from SME to PLC is called upon on a daily basis by other accountants who have clients in difficulties. Caution is required as negligence claims against an accountant / advisor may be taken where advice given is inappropriate to the circumstances. Murray believes this is where the Diploma will give advisors a good understanding of the fundamental issues allowing them to protect themselves and better serve this clients.
Business Turnaround
In the current environment, with businesses across all sectors experiencing financial difficulties clients rely on the advice of their professional advisor to an even greater extent. In many circumstances over the next couple of years they will require their accountant's assistance to help stabilise a failing business and to restore the business to a sound footing. Murray believes that the possibility of turning a business around must be examined as the first option by advisors and hopefully help the client avoid going down the road of formal insolvency proceedings.
Whilst each turnaround assignment is different, the Turnaround module of the Diploma Murray hopes will demonstrate the key processes involved in a turnaround assignment from engagement to exiting the process.
The module will look at some of the key diagnostic skills in analysing a business from top to bottom, looking at fundamental areas such as staff resourcing. It will also examine the issues around negotiating with Bank and key creditors, implementing informal schemes of arrangements with creditors and formal schemes under Section 201 of the 1963 Companies Act.
Having completed the module - Murray believes that the participants will be comfortable that they have the tools to design a business plan which will help clients stabilise and give a company as better chance of survival.
Members Voluntary Liquidations
The other area which Murray will be presenting is Members Voluntary Liquidations, this is appropriate when a company has completed its purpose, or the Directors of a company decide to retire. It is also a Tax efficient way of releasing the surplus which may have accumulated.
The past five years has seen a sharp increase in the number MVL's as they are a popular way of extracting accumulated funds and distributing them to shareholders. One attraction for shareholder is that they only pay Capital Gains Tax at a rate of 25%, as opposed to higher rates of PAYE/PRSI on an income type distribution.
It is also a popular way of dealing with freehold property held by a company as such a distribution avoids stamp duty.
Murray says that the course will cover MVL's in detail, from identifying where an MVL is appropriate through to the procedures for placing a company into a MVL and what are the key issues that an insolvency practitioner may face. Murray says that like everything - MVLs are not a problem when you know what you are doing - in the course we hope to cover all of the areas that could possibly trip people up.
The Diploma commences in January 2010 with a third of the places already reserved, to book your place or for more information go online or call Joe Carroll on 01 637 7316.