Our client provides individual support to people with a disability who receive benefit from National Disability Insurance Scheme (“NDIS”) mainly in NSW. The business was significantly affected by recent changes of the NDIS program and personal issues of the director, which caused it to suffer a significant reduction in chargeable hours.

Debt

There was an outstanding debt of $22,256 due to iCare Workers Compensation Nominal Insurer (“iCare”), together with an outstanding taxation debt with the Australian Taxation Office (“ATO”) of $420,903.

Background

Due to the changes of the NDIS program, including amending individuals’ plans for the clients of the business resulting in the reduction of the number of hours of support these clients received, tightening the criteria for eligibility to services and longer processing time on invoices submitted by the business, it caused the business’s income to stagnant.

In addition, the business was previously solely operated and managed by one (1) director. The pressure of relocating, together with the pressure of building the director’s personal house also had a detrimental effect of the business. As a result, the client had cashflow issues and it could not keep up to date with its obligations concerning the payment of its tax liabilities.

As a part of the SBR process, combining with the assistance from the external accountant in respect to strategic planning and cash flow management, the business undertook various actions to continuously improve its ongoing financial position and operations, including employing additional part-time and casual staff for the purpose of providing additional services.

In addition, another director, who has experience with project and financial management, took over managing the financial affairs of the Business.

Proposal

The ATO and iCare were the only affected creditors with a total outstanding debt of $443,159 and the Restructuring Plan offered a total distribution of $100,509 to affected creditors, with both voting in favour of the Plan, resulting in a return of 22.68 c/$.

Outcome

Following the SBR Process, the employees of the business have retained their jobs, the business continues to provide its crucial services to its clients and the directors have obtained a fresh start to carry on the business releasing it from the historical debts, all achieved without the significant costs of placing the business into Voluntary Administration.

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SBR Case Study of an NDIS Service Provider