Behind the Appointment: The Human Side of Insolvency with Glenn Livingstone

What actually happens when an Australian business fails?

Not the sanitised version. The real one - the day-one phone calls, the employees demanding wages to put food on the table that night, the childcare centres where a commercial decision becomes a moral one, and the directors who waited six months too long to pick up the phone.

In this episode I sit down with Glenn Livingstone, founding partner of WLP Restructuring - one of Australia's fastest-growing independent insolvency firms. Glenn has nearly two decades in the profession, over 1,000 formal appointments, and $64.8 million returned across every class of creditor since co-founding WLP out of COVID in 2021.

But before any of that - Glenn first read a creditors report at age 13. His father had just lost his entitlements in a corporate collapse. The liquidator recovered $400,000. Their fees were $400,000. That moment chose his career for him.

This conversation goes well beyond the mechanics of insolvency. It's honest, commercially sharp, and at times genuinely moving.

🏗️ Building WLP from Nothing

• Walking away from KPMG during COVID to start an independent firm with three people and no guaranteed work
• How WLP landed 4 voluntary administration appointments in its first week

⚠️ Early Warning Signs of Business Distress

• The financial red flags directors consistently ignore until it's too late
• Why the ATO has functioned as a de facto bank for struggling SMEs - and why that era is ending fast
• Why directors wait too long - and what it costs them when they do

🚨 Payday Super: The Coming Reckoning

• Why the introduction of payday super is "a little bit frightening" from an insolvency perspective
• What the closure of clearing houses means for businesses already under pressure
• Why this change won't increase the number of insolvencies - but will dramatically accelerate their timing

🔄 The Small Business Restructuring Regime

• Why SBR was a genuine game changer for viable businesses in distress
• Why the ATO is now rejecting proposals it used to wave through and what that means for directors
• The one-shot nature of SBR - and why botching it is catastrophic
• The uncomfortable question nobody in the profession is asking yet about the 2023-24 SBR cohort

⚖️ Insolvent Trading & Section 588G

• Whether Australia's insolvent trading regime is actually working as intended
• Why 588G plays completely differently for SME directors versus ASX-listed companies
• How liquidators decide when to pursue insolvent trading claims - and when it's simply uneconomic

😔 The Human Side of Appointments

• What day one actually looks like inside a failing business - the staff, the suppliers, the distress
• Why childcare appointments are among the hardest in the profession
• How to stay calm when employees are demanding money

📰 Media, Scrutiny & High Profile Collapses

• The role media plays in major administrations - when it helps versus hurts
• How administrators navigate the press when a high-profile business goes under
• The story of Daryl Lee chocolates - and how a media announcement accidentally saved the business

Glenn Livingstone is one of the most commercially pragmatic and genuinely human practitioners in Australian insolvency. This is the conversation most directors never have - until it's too late.

If you're a director, founder, accountant, lawyer, or creditor - this episode will change how you think about business distress.

Connect with Glenn: wlpr.com.au

Transcript

SPEAKER_01 0:00

Welcome to the Ryan Tan Show. Today's guest is Glenn Livingston. Glenn is a founding partner of WLP Restructuring, one of Australia's leading independent restructuring and insolvency firms. With nearly two decades of experience and over 1,000 formal appointments across administrations, liquidations, and restructures, Glenn has built a reputation as one of the country's most commercially pragmatic insolvency practitioners. Before co-founding WLP in 2021, Glenn held senior leadership roles at PPB Advisory, Ferrier Hodginson, and KPMG, where he worked on some of Australia's most complex corporate collapses and restructures. He is a chartered accountant, a registered liquidator, and an active member of Ariata's New South Wales on ACT committee. Under his leadership, WLP has handled major administrations, including St. Hilliers and Genius Childcare, and was part of the team behind the award-winning body catalyst turnaround, recognized by the Turnaround Management Association. Today we'll explore not just his experience in corporate collapse and recovery, but also the evolving role of liquidators in an environment of regulatory crackdowns, small business restructures, and ultimately what happens when businesses fail, whether Australia's insolvent trading regime works, and where restructuring law is heading. So with all that said, welcome to the show, Glenn. Thanks, Ron. Pleasure to be here. Thank you, Glenn. You've had quite a career. Obviously, you've co-founded WLP with your partners in 2021, and that's growing really quickly. You've made a name for yourself in the industry. Just wanted to understand what drew you into insolvency and restructuring.

SPEAKER_00 1:40

That's a good question. I think I'm a bit of a rarity in that. I at uni, I specifically targeted my degree and the subjects that I took so that I could end up in the profession. It's pretty rare that uh, you know, people select to go into it. So I want to see most people just fall into it. Um my experience probably stems from my childhood. Um my dad was involved in a in a collapse in the in the 80s, late 80s as an employee, long-standing employee at his organization that was placed into liquidation. Uh he his entitlements weren't paid. There was no feg back then, and so he ended up losing his entitlements at that time. And I remember it's pretty formative years for me. I was about 13. Um, having him read the creditors' report, look at it, and you know, saw that the uh administrator or the liquidator had recovered, I think it was about $400,000 or something in in assets, and surprising, surprise, their fees were $400,000. Um and I thought, geez, that's that's a pretty interesting career. They obviously get paid, they get to investigate what's going on with a with a uh company. I thought that's a really cool profession, has a lot to do with the law, a bit to do with the county. Something I want to try. So yeah, very, very targeted at uni, did an insolvency course, did pretty well. I think it was one of the only only subjects I did really well in. Um and then found my way into the profession pretty much straight out of uni. Best best uh career choice I could could have made. It's uh been a pretty fulfilling career.

SPEAKER_01 3:28

Yeah, that's fantastic. And you've you've definitely, you know, spent a lot of time in the industry and obviously running your own practice data. You would have seen a lot. I guess what motivated you to branch out? You worked at KPMG and some of the big firms. I guess well, I think that you started WLP just after COVID, which is an interesting time. Uh, what was the kind of thoughts around that?

SPEAKER_00 3:48

Yeah. As you mentioned, I was, you know, I'd been involved with large organizations, really, really well regarded. Practices, PBB, um, fantastic place to work, some unbelievable liquidators to learn, learn from and work with, people like Steve Parvery, who's you know, one of the duands of our profession, Tony Sims, one of my mentors, great to work with. That organization was sold, or you know, that was a merger between PPB and PWC. Uh, at that time, I was working with Steve Pavry on um Queensley Nickel, and there was a uh a conflict at PWC, and so him and I were unable to go to PWC. We we ended up moving from PPB to to Ferry Hodson, which was an a you know uh another a large independent independent firm. We completed the the Queensland Nickel Administration or special purpose deprived fairers. Ferriers ended up emerging with KPMG at the time, which was a great experience working in like a huge organization. I never thought I'd end up in the big four. Always thought that, you know, I'd be in the specialist firms and the really, really uh large national ones. But then COVID hit, and you know, COVID was a bit of a game changer for our profession. The work pretty much stopped overnight and uh you know for two years or so there wasn't much much going around. Big Four was a really good um organization to be involved in with COVID, there's so much uncertainty. Yeah, people's wages were being being cut and there wasn't a lot of work. So there was great to have some stability. But now what I found is that certainly in the SME space, the practice area, which I focus on, the Big Four, in in my this was my personal view, Big Four is not suited uh to assisting on the SME space. They're large organizations, the insolvency teams are a small fraction of the overall size of the organization, and you know, associating conflicts, things like that create some issues. Uh and so at that time I thought, well, you know, I actually want to do something where I can, you know, extract myself from conflicts, get back to, you know, being an independent firm. Uh, and I decided to start a business with, you know, my mentor, Scott Pasco, who I was uh, you know, I worked with him for so many years, 15 years, and and Alan at the time, you know, former PVB colleague. And yeah, we thought we'd uh start a firm. It's uh pretty severe looking back. We were still in lockdown when when the firm started, but the idea being, you know, we wanted to s to create a firm which was a little bit different from the ones that you know we were currently involved in at the time. Um we s we had some agreed values that were really important to us, and you know, we wanted to to look after our people, work on some big jobs, cool jobs, and you know let's have some freedom to to to uh do the things that we wanted to do.

SPEAKER_01 7:23

Yeah, definitely. There would be a space for like a bespoke niche player, right? As you said, not saying that the big four firms are not equipped to take on some of these smaller operations and liquidations, but you can actually give it the time that they deserve, um actually dig into some of the results uh or dig into some of the dealings and um actually get, you know, equitable and fair outcomes for some of the creditors.

SPEAKER_00 7:45

Yeah. Uh look, I think that they're equipped to deal with it. It's just the my perception is you know they're probably not as efficient at being able to do it. You know, they're they're big four, they're they're huge organizations. They have big overheads and big big structures and and you know, small and more nimble firms can take on more risk, so to speak. Their rates are probably a bit more competitive, the hourly charge out rates. And, you know, if you set up your infrastructure appropriately and your team size appropriately, then you can you can really run some of the small jobs really efficiently. Without big teams being deployed to, you know, small jobs, it's easier to to finish them quickly and get a result of creditors and and move on. So I mean that was pretty much the driving, driving force around it. Being able to set up an efficient practice, you know, that was not only profitable, um, but you could give experience to your team members to work on, you know, the full suite of engagements from you know really small ones to advisory engagements to some of the larger BAs that that we've been lucky enough to be able to work on.

SPEAKER_01 8:57

You've grown very fast. I mean, you've published your stats on LinkedIn, you know, millions of dollars return of creditors. I think it was around 21 million dollars. But you also paint the human aspect of like what you've done and been able to work on. So I guess in terms of like growing WLP and some of those early clients that you came on, as you mentioned, you know, you were coming out of COVID, and we had the jobkeeper, we had all of those stimulus going on. The ATO also had, you know, taken a moratorium on debt collection practices. Um, so that kind of creates that a challenging place for potentially a liquidator, but also for people in the credit space and debt recovery. So how did that work and how did that help? Were you kind of pursuing matters that had kind of you know metastasized before COVID? Or were these kind of matters that were say more um pressing, like Section 588 G breaches?

SPEAKER_00 9:44

Yeah. Um the time's gone so quick. Uh just trying to remember what it was like back then. I had a portfolio of jobs at that time when I when I left Sky PMG, and and I think one of the things is when you're a the liquidator of their personal appointments and so they trip they they generally transition with you when you you leave an organization and and certainly my um exit from KPMG was very respectful and uh you know allowed me to to take those jobs with me. We started off fairly small. We only had uh well, there was three of us at the time, and um we were working on some jobs, had no idea when the next job was going to come in. And it was luckily enough that you know, I think I received the first phone call within the first, I think it was on day four or something like that, uh, from a you know, long-standing friend and and and um referrer that I'd known for probably 15 years and reached out to say that he was acting for a director that needed some advice. Um as that turned out, I were you know four voluntary administration appointments that had started in our first week. Um we I I remember, you know, when we we signed the consent, you know, and had a large bank um involved. And I remember thinking at the time, you know, well, if I take this appointment, what will the bank think? Will they, you know, worry about appointing a receiver over the top for the WLP was incorporated four days earlier or something like that? And so there was always the you know, the concern that that they wouldn't know who we were, and and and as it turned out, um it wasn't an issue at all because you know our reputations as individuals before WLP, you know, as I said, we'd been at PvB, Ferriers, KPMG, or reasonably well known in the profession. And so yeah, we just uh uh effectively running a dual brand. Um the firm is one thing, but the individuals taking the appointments are uh you know something else. And so my name was well known um anyway at that time. And so yeah, that started us four jobs in our first week. We seemed to do a good job, I think, on that one. We got a good result for cr for creditors, and then we started tracking our results. That's uh a really important thing that we've we've done since day one. You know, our job as administrators, liquidators, receivers is to recover money for others and we're we're there to fulfill a role for others. It's and so the only way to truly measure yourself against you know not so much competitors, but industry best practice is to to to let people know what we've done and and we make no apologies for that. We we track it to the dollar. And that every time we pay a dividend, we we keep a record of it and pretty diligent about about uh you know releasing those unfiltered results every three months at the end of every quarter. It it it starts discussion in the profession about you know what is your actual role. Your role is to get money back for other people. It's not you know, there's no self-interest in that. And so, yeah, the unfiltered results. I think uh the fact that we do track it and we do publish it has certainly assisted in our brand recognition in that you know this is what we stand for. We are you know there for others, and that's fed you know some other work as well. It it it it certainly helps on an initial discussion with the director who's who's referred to you from you know a lawyer or an accountant, um, when they sort of ask the question about what your goal is, then we can just point to our historical results. Well, this is what we do. We we get money back for for people. We try and save businesses as much as we can and we transition employees to new entities, but you know, at the end of the day, if you're a you're a liquid add, it's your job is to get a return for creditors.

SPEAKER_01 14:01

Yeah, absolutely. Yeah, I love the numbers that you're posting. So I've had a look to $21,614,792 paid to 46 secure creditors as of last year, June 20th.

SPEAKER_00 14:11

So I think the thing I'm most proud of is um, you know, and and maybe the number's not as sexy, so to speak, is the number to the petitioning creditor. I can't I don't know if you've got them on there, but you know, we've paid petitioning creditors about six hundred thousand or something like that, five hundred thousand. Um they're they're individual creditors, whether it's the tax office or the workers' nominal insurer or individual creditors who have put money out of their own pocket to chase their own debts and and paying those back, you know, they get paid back before fees, which is a you know a positive thing for that creditor. It might not seem a huge number, but when their costs are only, you know, five to ten grand, you know, that's a lot of five and ten grand dividend uh checks to to people to get their money back. So it's probably the thing that we're we're most proud of.

SPEAKER_01 15:07

Yeah, absolutely. And in those you know, four years, so we're coming out to five this year, you know, 316 liquidations. That's impressive. You know, 148 voluntary administrations, and then you've got dockers and bankruptcies as well. So that's cool. I like the stat being published here $3.7 million in time that we don't charge for. So what's that all about?

SPEAKER_00 15:27

Yeah. I think there's a perception out there that administrators, or let's call them external administrators, are in it for themselves. And, you know, we're there's no doubt that we're very expensive. We administrators take wrong risks, we're personally liable, and you know, at the end of the day, we're professionals that that charge an hourly rate. There's certainly a perception that administrators take all the fees and and you know, creditors get nothing. Uh, they might get a cent in the dollar return. What what you know the broader so what broad broader society probably doesn't realise is that administrators are one of the liquidators are one of the only professions that have to undertake jobs for free. Certainly, if the court appoints you as a as as a a liquidator, you need to accept the consent. And so if there's no money or coverage, you don't get paid. And so um there's certainly a lot of instances where we don't get paid for the work that we do. We think it's important to to start the discussion that no we are providing a community service for for the economy as well, and and we recycle capital, ensure that underperforming businesses are exited from the market, and and new businesses can be smaller from that. And so now our part to play in that is yeah, we we do it and we do it for free sometimes. We don't get paid all the money that be uh that we do. And so yeah, we track at the end of the job how much time we we've obviously spent and how much time we haven't been hopeful. I think the numbers are a little bit higher than that. Yeah. So I mean the idea being this is what it is today. Tomorrow, when we finish another job, that those numbers are just only going to increase. So it's really to start discussion amongst the profession.

SPEAKER_01 17:14

Yeah, fantastic. And it's great, you know, you're balancing your fiduciary duty with the community service obligation. And you know, that's important because there's a lot of conflicts in the profession. So love to see that now. In your opinion, what separates a good liquidator from a great one?

SPEAKER_00 17:30

Well, that's a good question. I've had some pretty bloody good mentors that I would consider, you know, easily in the great category. You know, Steve Parbury, Tony Sims, uh Scott Pasco come to mind. They're very smart people for starters, you know, very intelligent, very empathetic as well to people's situations, distress. They are normal people at the end of the day, and um very approachable, likable, you know, they they they're in there to help other people. You know, there's not a lot of self-interest in what they do. Uh you know, that if if you're making decisions for the betterment of a company, creditors, employees, and you can clearly distinguish, you know, that making those decisions for other people as opposed to self-interest, you know, whether it's for fees or whatever, I think that's a fair indication, you know, of what a great liquidator does. And there's plenty around in the profession today, but they're certainly the ones that that immediately come to mind. Uh it's probably hard to pinpoint exactly what it is that makes them great. They're they're well respected by their competitors, that those in the profession, um, regulators, I think the names that I've all all mentioned, you know, highly regarded by government agencies and and regulators of banks and competitors. It's yeah, I think it's having having the respect of your profession and and those that you work with and for is probably a fair indication of you know what makes a great part.

SPEAKER_01 19:15

Yeah, absolutely. So it's a great angle you talk about the human side of appointments. Uh and I mean walking into a business, you know, as an administrator or a liquidator, um, it's a very human element to it, aside from say the statutory work. What does that actually look like when you do that for your staff? And then you're dealing with you know management suppliers, unpaid employees, under fed, you know, what's that kind of like?

SPEAKER_00 19:37

Yeah, I I think there's some job jobs which are more challenging than others. You know, certainly professional services businesses are very different from construction or retail or things like that. There is always a human element to every single appointment. And uh with distress and and the human element creates complexity, it's a real challenge for the administrations. I think the hardest ones to deal with are those that concern vulnerable people, whether it's you know, vulnerable children in foster care or crisis accommodation or childcare in particular, they're really, really challenging appointments because you know, whilst there might be a commercial decision that you could make and if there's no money to to trade and things like that, you know, closing down those types of businesses have a real impact and uh and almost brings in to focus more of a moral decision as opposed to a commercial decision. You know, if you shut down the childcare business, for example, uh, and we've had this scenario recently, we've we've done quite a few, is you know, what does that mean for mums and dads in their employment? You know, they're they they can't place their children in childcare, and so do they then have to to uh you know take time off work and you know what's the additional cost associated with that? Um yeah, as there's no doubt it's challenging. People in distress uh and people's livelihoods you know resting on the you know some of the decisions that you make. Yeah, it's challenging. I think I think that the best thing to do is being empathetic to their situation. You're there to try and help them as much as possible. Um you know, the the company or the organization is in the situation that it's in from no-doing of your own as an administrator or liquidator, but your job is to try and you know help them get through that process, whatever that looks like. Yeah. I think I think uh for someone young coming into the profession, um it's confronting the first time they're yelled at by suppliers or uh employees, um, you know, that demand money, so they can put food on the table that night. It's a challenging thing to be able to deal with. But I think if you, you know, as time progresses, you you learn to be calm, listen to people. That's the key. A lot of people just want to vent uh and then try and help them through whatever that looks like.

SPEAKER_01 22:15

Yeah, totally. Yeah, it's challenging to navigate all the interests. You know, you want to help everyone and get the business back on track. So when you first get appointed, you know, how do you kind of look at the human impact? Um, is that something that you look at first and foremost, you know, dealing with childcare operators, but also other operators?

SPEAKER_00 22:31

I think if you you know there's some pre-planning, if you if you can do some pre-planning about, you know, what does an appointment look like and and you know who are the stakeholders, you can try to mitigate whatever risks that there are and you know, fallout that might occur as a result of childcare, for example. Um, you know, that might involve discussions with the government. And I know certainly, you know, from earlier in my career, yeah, I mean you mentioned a genius, but you know, earlier in my career, ABC childcare was a huge, huge collapse. And you know, there was some engagement with the you know federal government about funding, you know, unprofitable childcare centres at that time. You know, what you don't want is 3,000 parents being unable to put their kids in childcare. Other organizations are different, and certainly if you uh you have a you know court appointment on a job where you can do no no um no pre-planning, and then you you receive the order from the court and then you're out there shutting it down on day one. Yeah, I think that they're really challenging. But each prof each industry has its own nuances, you know. Secret construction obviously has its own issues, there's risks associated with trading, OHS risks, transport as well, insurances, things like that. There are particular types of businesses that are really difficult to run. Um and you know, without adequate financial support, it's almost inevitable that they get shut down. Unfortunately, directors tend to think that the company's situation will get better and wait a little bit too long until they approach administrators. And sometimes you're hamstrung in terms of what you can actually do. There's just no funding to be able to continue. That's also challenging, right? Because then you're making people you're terminating the employees pretty quickly.

SPEAKER_01 24:36

Yeah, totally. I guess the whole you know reason that we're in the profession is uh for you know helping businesses get back on track. Sometimes there's a genuine argument whether they use a small business free structure to kind of get back on track or whether they just you know do a voluntary wind up or get shut down. I guess at the core of that is business distress. So in your opinion and what you've seen, what are some of the earliest signs and indicators of business stress?

SPEAKER_00 25:00

Yeah. As I said, each industry is a little bit different. If your suppliers are delaying payment, for example, that's and you're your your business highly cash dependent, that's a rent flag that you know things might be in trouble down the pipeline. But in the same context, if you're in construction and you haven't been paid for 60 days, it's not really a big deal because that's the industry nor I can't even remember your question now. Yeah, what are what are the early warning signs? Oh, early warning signs. Uh look from business in distress, easiest one is tax honors. You know, aren't not paying not paying those creditors who aren't chasing you hard. And and traditionally, Australian businesses have used the the tax office as a bank to you know defer paying their PA1 GST. Super is another one, flea super. Not being able to to meet your your tax obligations is a is a fair indication that there's some distress for them farming. And I think payday super, uh which has come into effect shortly, you will really change the outlook for the business environment if you can't pay your soup up on time. I mean, I think it's a great thing for employees, because ultimately it's their money. Uh but if you can't pay your employees, then you really shouldn't be continuing to trade and and make the position worse. If if there are systematic issues in your business which can be fixed, fantastic. Yeah. Sometimes it can just be as simple as right-sizing the business. You know, um asking for some delayed payment terms or some of your key suppliers are key key predators, and you might be able to get through the challenges. But yeah, I mean, there's certainly some red flags. Cash is king, and if you're not collecting your cash, then then your businesses tend to get into a bit in trouble. Yeah, absolutely.

SPEAKER_01 27:00

Yeah, you make a good point on the ATO, you know, having to pay the super or the pay as you go on a quarterly basis. It's ultimately just a deferred tax liability. Wow.

SPEAKER_00 27:10

That's right. I mean people are using uh their tax liabilities as as working capital to continue their business and paying other suppliers or paying other creditors without paying those tax obligations. When GST is not the company's money, and needers P A Y G and need is super. It's uh other people's money, and so they shouldn't ever be used as working capital business.

SPEAKER_01 27:37

With the payday super, I mean, yeah, it's a really interesting point. I guess given the closing of clearinghouses and obviously having to you know change the cash flow nature of these payments. Do you think that will have a rapid flow on effect in terms of the insolvency events?

SPEAKER_00 27:51

Yeah. I think it's a little bit frightening from the professional point of view. Um there's no systems in place at the moment to deal with payday super. And you know, you mentioned the closure of the clearinghouse. There's a real concerns. Certainly a concern for the administrators and liquidators out there when we're trading on too is that how are we going to pay the super of our trade-ons, you know, when we can't utilize the the ferry houses. Uh, I think it will probably result in more, you know, a similar number of companies being placed into liquidation. Now, if you if you couldn't pay your super before payday super and you can't pay it after, there's no real difference. It's just that the timing on the appointment may be sooner because you know that debt is being um identified earlier. You know, if you think about super not being identified uh to the end of the quarter, most people aren't noticing that their super's not paid. But if it's not paid on the day that they get paid, they might notice it a bit more. So it it it might, I don't think it'll change the number because ultimately a a company in financial distress will eventually be wound up or or shut down anyway. And so um there's no real difference then. But it just might make it make might make Dear Portland quit up.

SPEAKER_01 29:15

Yeah, it definitely. Yeah, a lot of it hinders on timing, right? Because when you have these quarterly payments, then small business owners are setting payment plans up with the HTO, then they're failing to meet their obligations, and that results set a DPN being issued, and then they're resulting in you know getting urgent legal advice or the HTO taking the matter into their own hands. So nothing fundamentally changes. It's the timing and the classification of these payments, and as you said, cash flow is king. Yeah, that's right. Fantastic. I guess for for directors, you know, when should they seek advice for the liquidator? Is there certain you know instances where you know they're concerned about cash flow or operating as a going concern? When should they reach out?

SPEAKER_00 29:51

Yeah, I mean, I think if you ask anyone in the profession, they would say as soon as possible. Um I guess it's very rare for a director who runs a company to reach out to a liquidator. Um one, there's the stigma of I don't want to lose my business, and so why am I going to talk to that? You know, end of the day, we're professional business advisors that assist in corporate structures. What tends to happen is that you know, especially in the SME world, the you know, the micro and the SME world is that directors will go to their accountant first, and their accountant might be able to help them, would generally refer them on to a liquidator. And so a lot of our uh engagements are through referrals from liquidator or one other liquidators, but you know, accountants and lawyers, very rarely does someone Google you or in the old days pick look down the white pages to find out the liquid. Now it's Google. There's no doubt that there are some. They tend to occur when you know the business is in severe financial distress and they learn to do something about it. But you know, a little bit of distress, very rarely do they they approach liquidators, but they should. I guess how do we, as a profession, um you know, uh increase the messaging that the earlier the you're getting you can get some assistance the the more options you have. I think if you were to look at it in the context of my business is in trouble, I need some help. Who can help? People that can help are the ones that can stop your company from dying, and the only ones that can do that are liquidators. So I think uh yeah, a little bit like going to the doctor. If you've got problems with your heart, you go to the doctor, the doctor refers you to a heart surgeon. Same kind of deal. If you've got problems with your company, uh you go to your account, and your accountant refers you to a specialist, which is an insultancy practitioner.

SPEAKER_01 31:57

Yeah, absolutely. And that's the role of the modern liquidator, right? I know it's changed a lot, the stigma's changing. Um, small business restructures are a key and vital part of it. And I think, you know, slowly liquidators have a role, and sort of so do service professionals around opening the conversation to say, look, you know, it's not it's not a black and white outcome, it's not liquidate, or we're gonna shut you down, uh, but we can start the conversation of an SBR.

SPEAKER_00 32:21

I think I think the SBR regime's been a game changer for a lot of businesses. Uh I mean, where it comes from is historically, you know, it was a lot of analysis done back in the early 2000s or 2000 to 2012, and certainly we did a lot at the time when I was at Pivot B. Uh at that time, 96% of liquidations did not pay a dividend. So that means that on you know, only 4% of jobs paid a dividend. That means creditors are writing off. You know, rather than um, you know, wipe these companies out of existence, is there a better way uh to restructure them such that you know good businesses, whilst in a little bit of distress, can can um can continue and uh you know there is a compromise where there is a return to people. And so SBR certainly assisted that, no doubt driven by COVID and the fear that existed at that time that you know there could have been significant corporate collapse if there wasn't compromises on debts. There was it was a little bit of a slow uptake for the first year and a half, two years ago. Then it seemed to explode last year. So many SBRs now creditors certainly being open to compromise to get some money back rather than none. Um it seems to have slowed down a little bit to probably some of the rules and regulations re regarding some of the proposals being tightened up by you know statutory bodies, which is a sensible thing, right? You can't have a system which is being abused uh just to compromise tax debts, for example, what in circumstances where you know there's outstanding directed loan accounts and things like that. So, you know, deal with your loan account, pay the money back to the company, and the company can then pay back its tax. Um but yeah, I think they certainly have a place to play. Uh I mean I think the thing to keep in mind is that if you're trying to save a business and SBR is the right way to do it, you get one chance at trying to restructure. And you know, as people know, SBR is only available to you once. And so, yeah, it might reset you. But if your business was bad originally and you haven't dealt with the underlying issues of what put you in that situation in the first place, even if you do an SBR, it's inevitable that you're going to get back into the same situation, which means that they're up, you know, there won't be a restructure available for you unless you do it through an administration, which could be significantly costly. And I think we're probably, you know, reaching uh the point where some of those businesses that went into SVR in say 2024, you know, whether they've they've obviously come through that has it set them up for success or are they destined to fail anyway?

SPEAKER_01 35:20

Yeah, definitely. It'd be good to see the numbers on that. And like you said, SVRs give the business a genuine chance to kind of restart and put their ducks in order. I guess the other side of it is, you know, it's become very popular. There's a lot of practitioners out there kind of selling it as the dream. Then you've got the ATO's role where, you know, they a small business structure might opportunistically position themselves as 25 to 35 cents in the dollar. The ATO then rejects that, which then, you know, it's a bit of a conflict. So I guess the ATO needs to look at, you know, we need to get the business back on track and relieve it of the prior debts. But then there's the other argument for you know letting the business leave it of its debts, creating more economic output and giving it a fresh start.

SPEAKER_00 35:59

Yeah, yeah. I think it's a challenge, and certainly from a a regulator, major creditor, even though they have an informed role to play, but sometimes it's not just about the cents in the dollar return. You know, there are other factors at play like compliance and and and things like that. I mean, what would be a great scenario to be in would be a company starting with, I'm in distress, I can't pay my debts. I can't pay them in full, but geez, I can get back as much as I can. And unfortunately that's not the starting position. The starting position is I can't pay my debts. I want to compromise. I want to pay the least amount as possible. And I think if even directors and and advisors were putting forward the best possible proposal that could be met, then we would have probably a very different view from the regulator, such that it wasn't just a 30 cent return, you know, an arbitrary number that people think that they can get through with. This is the best outcome that we can get, and the alternative is zero. But I think that that's a challenge. And and I think that you know the profession and the you know the small business restructuring practitioners have a role to buy in pushing proposals to make sure that they are as good as they can be, and not anchor the the 30 cents. You know, a company can obviously pay a company can pay what it can pay, not you know, and so that it's amazing that surprisingly over 30 cents, it's not the case, right? They should be able to pay more. But but also not push themselves so far that it makes the plan um you know doomed to fail as well. Then you you want to utilize the the process to get a genuine compromise, but shouldn't put yourself at risk, but at the same time that you shouldn't get an unfair advantage.

SPEAKER_01 38:06

Yeah, absolutely. Yeah, there's definitely work to be done, and it will be interesting to see the numbers from cohorts out of that. Now, in terms of insolvent trading in section 588 G, obviously statutory provision to not be trading insolvent. I guess where do you draw the line on that? Because you could also argue that you know most businesses are insolvent, they can't pay bills as they fall due, there's payment plans, or they defer it, and they're in a genuine underlying situation where the cash flow can just never meet it. Uh, we saw that in COVID where you know the ATO was pursuing creditors even three, four years overdue and finally, you know, doing ATO-initiated court actions. In your opinion, is 588G? Is it working as intended?

SPEAKER_00 38:44

Um, it's a good question. Uh I think it is. I mean, I've for in a liquidator that's relied on 588G to pursue claims for pretty much the entirety of my career. It's a complex question. At at SME land, insolvent trading is not a huge concern for directors, mainly because their personal lives of well-being and livelihoods are tied up in the business in any event. And so they've signed personal guarantees and you know they've they've you know their their houses um cross-qualitized against other loans that they're given. And so corporate collapse in that sense will bring down their personal asset position. Uh, and so you know, and training their business on and being personally liable for those debts is nothing when you've got a personal guarantee. If you can't pay, you can't pay. And so that in the SME land that directors aren't that focused on it. At you know, larger organizations and certainly where you have uh professional directors, so ASX type entities, those that have net uh non-executive directors, insolvent trading is a huge issue that they're concerned about. And you know, the the implementation of the Safe Harbour regime has certainly assisted those bigger organizations, weighed through some of the challenges, give some comfort to directors to try and restructure whilst they work on their plans. You know, and I think if you're asking the questions in the context of is installment trading working for huge organizations, absolutely it is because directors are really alive to that, taking professional advice, trying to restructure, appointing administrators when they need to. Um in SME land or micro the SME land, it's probably not that much of a uh an issue. One, because directors aren't educating themselves on their personal exposure, but two, there's also the fork and the liquid that won't chase them anyway. And so, you know, if they breach their duties or they've they've got a loan account or their trader whilst insolvent, I mean what tends to happen is that you'll chase the loan account because that's the easier debt to pursue than and sue someone in the Supreme Court and file expert evidence, things like that for insolvent trading. So I'm not sure if I've answered your question, but I think I think, you know, from my personal point of view insolvent trading plays a huge role in in in uh corporate environment. I like the fact that you can be held personal. Um there are there are steps to be taken to mitigate those risks, and if that includes appointing a ministry or taking safe harbor advice, great. Um but yeah, I think I think it's playing an okay role. Could it be better? Yes, but I don't think it should be abolished.

SPEAKER_01 41:50

Yeah, totally. And yeah, for the small businesses listening, I totally get there's you know, striking the right balance between entrepreneurial risk and having director accountability. You know, you did raise something very interesting, uh, which is that obviously liquidators, you know, you have statutory uh provisions where you can take these actions against company directors or agents, officers involved. I guess do you agree that doesn't usually happen from the fundamental construct that you know there's not enough money. And if the creditors don't fund that legal battle against these breaches, assuming they deem them viable, it just creates a dynamic where it's not going to happen.

SPEAKER_00 42:27

Yeah. I mean that's an interesting question. There are certainly those liquidators out there that are more willing to pursue insolvent trading claims than uh than others, and whether that's either through a funded matter uh or a liquidator taking an action on a speculative basis to pursue directors. Um I think it really turns on the facts of e each case. Uh how big is the debt size, you know. I mean no one wants to fomence proceedings that one are going to be unsuccessful. So there's two two two things to to consider. One, what is the size of the claim? How much debt has been incurred? Two, um, what are the defenses available to that? So, you know, was the director trying their best and you know, provided assistance to the liquidator? Uh and three, what's the recovery look like? Does the director have assets available that you could pursue? Um each of those three things need to be need to line up to to commence an insolver training action. You know, if the director doesn't have assets, it's unlikely that a formal insolver trading proceeding would be commenced. Um why would you sue someone when you can't recover any mate? But there are there are reasons why you might do it. You know, you might do it in conjunction with a, as I said, a bridge of duty claim or a a loan account claim where you you run it as alternative argument. So um I I I wouldn't I wouldn't say that liquidators don't look at it. You know, the other thing is too liquidators report these offences to to the regulator and you know for fair to say that if a company's placed into liquidation that a liquidators are reporting that there's been insolver trading on 99.9% of the where the the jobs whether there's sufficient evidence to I mean some directors don't assist liquidators so they don't give them the records from which to form the view uh that's a a real issue as well that no records um no records or also democracy form it and so there's automatic insolvent trading in that in that sense but um there aren't a lot of judgments out there for insolvent trading but that doesn't mean a lot of proceedings aren't commenced and settled yeah totally like you said the records as well it's often only when the company actually goes to a liquidator do you discover that you know there were hidden related party transactions as cash payments that were never declared into the director's personal bank account and whatnot.

SPEAKER_01 45:04

So it's a good point. I guess just to tie off the interview and close it off what role does media scrutiny play in high profile collapses? It's probably not that common but I've seen obviously in the financial review there's been some the stories and things like that. Does that play a part in high profile matters?

SPEAKER_00 45:19

Yeah it does I mean our firm's been we've got a number of high profile matters recently some played out in the press and there's a particular um personal insolvency that was you know uh had some keen media focus what is the role of media I mean my view's always been um the media play a huge role in disseminating information yeah clarifying misinformation too uh one of the ones that I can remember you know where I thought I think the media um really assisted was uh administration of Darrell Lee which was going on at the time of um when I was at PVB and some of my old partners were the appointees it wasn't me personally Darrell Lee chocolate manufacturer that had individual leasehold stalls around the country and most people probably remember that was individual stores in um shopping centres you know now you get Darrell Lee Coles and Woolys but um you know it was released to the media that Darrell Lee was was uh in administration and maybe shutting down and and we'd done some projections about what the training position was going to look like and then you know the next day there were people lined up around the corner to get their their uh Rocky Lee Road and their chocolate bullets and orange balls and peans and so our trading performance improved significantly because you know there was a genuine outpouring of support for that business at that time. You know and and if it wasn't for the media you know saying that or at least announcing that then maybe it would have been a very different then people wouldn't have been um lining up to get their chocolate. But they they certainly were in Haman. They also play an important role in in in ensuring employees in particular focused on doing their jobs and and if they can understand that the administrators are out there trying to save their jobs, which is generally what we're trying to do, then that helps as well. And media also have an important role to play on you know those collapses where there's been bad behaviour you know holding people accountable you know chasing chasing them down and certainly that's been a f uh part of my career I've had some really big collapses where Lydia is keen to explore you know certainly high profile people. Yeah it makes it a a challenging part of the job but it also an important important part as well. We need to get the information out now what's going on not everyone reads the administrators creditors reports and if you're not a creditor how else do you find out what's going on especially if you're a you know on the periphery of that business they're a competitor or you know you're involved in that industry the media help in disseminating information to them about that collapse that they might not ordinarily get yeah totally yeah and I guess there's the other side as well you know some people critique the media to say there's things they don't cover or don't want to cover like media yes they play a fantastic role and they've they definitely help there's also cases where they might not report or they might not be sharing certain things and potentially they also can't when there's certain situations on underqualified privilege.

SPEAKER_01 48:45

What is your take on that and the insolvency and liquidation space?

SPEAKER_00 48:48

Yeah I think you know the the media has an own interest in in writing stories which you know readers will be interested in I think the not reporting my my perception is if the media can release information they would they will and especially if it's an important story. The the not reporting I think would only be a case where they can't verify their facts and evidence and so the damage of putting out uh an unverified story would be would be worse than you know trying to cover it up. My sense is that it's in their interest to get it out there anyway. So less likely to be a cover up. There there are certain things that what administrators think you know quite newsworthy you know we will we will send it to the press or use our um media advisors to to to push it out there and the and the media won't pick it up because the story's old or someone's already written about it. On day one when you are appointed to a big retail business for example and that you know the headline is five hundred jobs lost. That's a great headline but three months down the track when you've saved those 550 jobs unfortunately the media don't want to pick up that that those jobs have been saved. And so um yeah that's it that's an interesting thing as well. You know what stays on the uh public domain is that the this business lost all these and four years when we reality is and they eventually get saved. Yeah awesome well thank you very much Glenn it's been great to speak to you today and just lastly for the listeners how can they get in touch with you and WLP if they sure um well firstly thank you for the opportunity I've had fun um we have a website you can contact us wlpr.com.au um happy to help answer any questions that people might have about you know challenges that they're facing you know for those people interested in starting out a career in insults yeah I'm also yeah we're happy to to take some falls um yeah it's a little bit about our firm on on our on our website yeah amazing and for Glenn's LinkedIn Scott Pascoe as you mentioned I think Ben the new partner posting great content really interesting and rigorous so thanks again Glenn really appreciate your time today. Thanks for cheers