Companies Act 2014 section 558C

Process adviser to determine whether eligible company has reasonable prospect of survival

Section 558C sets out the process by which a process adviser determines whether a small or micro company in financial difficulty has a reasonable prospect of surviving as a going concern, and the factors that must be considered in reaching that determination.

• Once a director submits the required statement and statutory declaration about the company's affairs, the process adviser must assess whether the company (or part of its business) can survive as a going concern
• The process adviser must consider a broad range of factors including the company's business prospects, cost structure, funding availability, market conditions, and whether business plans are based on objective evidence
• Additional considerations include the company's brand and cultural importance, its position within any group structure, whether a secured creditor has expressed interest in a trading receivership, and any other matters the process adviser deems relevant
• After reaching a determination, the process adviser must meet with the directors to explain the decision and its reasons, and must also provide written confirmation of the determination