Sponsoring Company on the Brink of Insolvency — the 186 Employer-Sponsored Permanent Visa Still Approved
Midway through a Subclass 186 employer-sponsored nomination, the sponsoring company lost a commercial dispute, came close to insolvency and entered a Deed of Company Arrangement, and the Department issued a section 57 request. We answered the Department’s four concerns point by point, turning the apparent disadvantage into a strength — and the applicant and their spouse were granted permanent residence.
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Case Background
In this case, the applicant was employed as an accountant by a company and applied for permanent residency through the Employer Nomination Scheme (subclass 186).
During the processing of the nomination application, the sponsoring company lost a commercial dispute and was ordered by the court to pay outstanding goods payments as well as legal costs. As a result, the company experienced significant cash flow difficulties and entered an external administration process, ultimately executing a Deed of Company Arrangement (DOCA) in order to continue its operations. This development became an adverse factor affecting the company’s nomination eligibility. The Department of Home Affairs therefore raised concerns regarding the company’s operational capacity and, pursuant to section 57 of the Migration Act 1958 (Cth), required the company to provide explanations addressing this adverse information.
Relevant Legislation · Legal Basis
Migration Regulations 1994 (Cth):
- Reg 186.233(4A)
- Reg 5.19(4)–(5)
- Reg 1.13A(2)(d)
PAM Guidelines:
- Policy 4.4.2.1 – 4.4.2.2
Key Challenges
After the sponsoring company entered into a DOCA arrangement, the Department raised concerns as to whether the company could still satisfy the requirements to remain an eligible sponsor, including:
Whether the company was still actively and lawfully operating.
Whether the nominated position remained a genuine position.
Whether the company still had the financial capacity to pay the nominated salary.
Whether the commercial litigation indicated any broader integrity concerns or compliance risks affecting the company’s sponsorship eligibility.
What We Did
As the company’s migration legal representatives, our legal team provided detailed responses addressing each of the Department’s concerns:
Showing the company could still keep operating
We explained that the execution of a DOCA indicates that the company still has the potential to continue operating, rather than proceeding directly into liquidation. Under the DOCA arrangement, the company was able to retain its business operations, client relationships and employees, thereby maintaining the possibility of continued profitability. Supporting financial statements were provided to demonstrate that the company retained a degree of financial viability.
Showing the nominated position remained a genuine position
We clarified that under the DOCA arrangement, the company had not lost operational control of its business as would occur in a liquidation process. Instead, the creditors agreed that the company would continue to be managed by its existing directors. The company therefore retained substantial control over its day-to-day operations and management. The company confirmed its decision to continue employing the applicant as its accountant, and evidence was provided to demonstrate that the applicant’s employment had not been affected during this period. In fact, under the circumstances, the company particularly required the applicant’s professional accounting skills to help stabilise the company’s financial operations and support its continued recovery. On this basis, we demonstrated that the nominated position remained a genuine position.
Demonstrating the capacity to pay the salary
Based on the financial documentation submitted, the company was able to demonstrate that it retained sufficient financial capacity to continue paying employee salaries.
Clarifying the nature of the litigation
We further clarified that the nature of the legal dispute involved was a standard commercial one, and did not indicate any integrity concerns or unlawful conduct on the part of the company.
The Outcome
Through this approach, our team accurately identified the key legal issues and concerns raised by the Department in relation to the company’s nomination eligibility, and provided targeted responses in accordance with the relevant legislation and policy requirements. By strategically addressing the Department’s concerns, we were able to effectively turn the company’s apparent disadvantage into a strength.
Ultimately, the applicant and their spouse (as secondary applicant) were successfully granted the Subclass 186 permanent residence visa, achieving a positive outcome for the family.
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Handling team: NSLegal
Disclaimer: this case study is provided for general reference only, does not constitute legal advice, and does not guarantee similar results. To protect our client’s privacy, identifying details on this page have been de-identified. For advice on your specific circumstances, please contact our lawyers.