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For China-based owners of Australian subsidiary companies and assets
When it comes to business-changing decisions, organisations can find themselves too close to objectively identify the best path to take. Added challenges can arise when key stakeholders not only have differing expectations, but there is also a need to navigate cultural differences.
An Australian subsidiary of a Chinese-owned group engaged Grant Thornton to undertake an independent diagnostic report. There were many factors at play: from complex financial and internal structures, and differing strategic ambitions, to cultural and language barriers between the Australian, its parent and key stakeholders. The business sought an independent review to assist management in making commercially-sound decisions for all stakeholders.
An Australian subsidiary of a Chinese-owned group required an independent diagnostic review to consider their current financial status and options for the Company.
The purpose of this review was to allow all parties to get a complete understanding of the subsidiary’s current financial position, but also to identify the different options available, and the implications of each course of action on the Company and its stakeholders.
In addition, there was a need for our team to communicate and deliver our findings in both English and Mandarin.
Grant Thornton was engaged by the business to prepare this high-level diagnostic options review for the directors.
The scope included consideration of financial, legal and strategic elements, as well outcomes that included both going concern and formal administration outcomes.
The team at Grant Thornton – led by the firm’s restructuring and turnaround experts – took a whole-of-business approach to the analysis, bringing together our financial and turnaround expertise, alongside our Chinese practice.
Identifying innovative solutions, and maximising value in the circumstances was the focus. Our recommendations also accounted for crucial non-financial factors for success, including cultural sensitivities, translation to Mandarin, and identifying and managing potential reputational issues for the Chinese directors.
The Chinese-based owner decided to pursue one of the options identified by Grant Thornton.
The solution helped protect the reputation of the locally based Chinese directors, and mitigated a large financial loss, with value preserved in the broader group and residual funds made available to reinvest or repatriate to the parent.
“An innovative solution must go further than the numbers alone. Our approach considers both the financial and non-financial elements, whilst balancing the cultural, reputational and community expectations of a Company’s locally based Chinese directors and stakeholders.” - Matt Byrnes
Matt joined Grant Thornton over 25 years ago and has held a number of leadership roles including National Head of Restructuring Advisory, National Head of the firm’s manufacturing industry group, and forming and leading Grant Thornton’s Asia practice. He is a passionate champion of the firm, its clients and people.
Australia transport insolvencies rise as freight margins compress amid cost pressures.
It is important for business owners facing financial distress to understand all the options available to them. Small Business Restructuring (SBR) offers a pathway for small and medium sized Australian companies experiencing financial pressure to deal with unmanageable debt, reset operations, and continue trading through and beyond difficult times. SBRs are also a cost-effective solution to save a business compared to a liquidation shut down.
The Full Federal Court has handed down its decision in AusNet Services Limited v Commissioner of Taxation. AusNet argued that its 2015 restructure did not qualify for rollover relief under Division 615, despite that it earlier said it did. This case serves as a reminder that once a tax election is made, it is very difficult to unwind. Careful planning and forecasting are critical.
