Insolvency

Company Insolvency

For all corporations, today’s business climate is in a state of constant change and unfortunately, corporate collapse is a risk factor which carries not only risks but also responsibilities for company directors and executives.

When problems arise, often people ignore the situation hoping that outside factors will turn things around or a prospective contract or deal will solve the current problem. It is not wise to rely solely on such factors or events as a single factor they rarely save the company from subsequent insolvency.

It is our belief that business owners and operators, who acknowledge and understand the warning signs and seek assistance early from their financial and legal advisers, can in many cases avoid company insolvency.

The definition of “insolvent trading” for a company is simply continuing to carry on the company business, while being unable to pay debts as they fall due. The definition appears simple, but the interpretation is complex and dependent on many factors. Each case has its own individual story. If your company does experience such problems do not hesitate to obtain both accounting and legal advice immediately. Our firm has experience in corporate insolvency for both small and medium sized businesses.

Personal Insolvency – Bankruptcy

Our firm has experience in acting on behalf of individuals who wish to pursue bankruptcy proceedings either as a creditor or as a debtor.

Creditors

In most cases unsecured creditors who wish to commence bankruptcy proceedings require a Court Judgment against the debtor showing they are owed a debt of $5,000.00 or more.

Bankruptcy proceedings on behalf of a creditor are reasonably straight-forward, however, in many cases the difficulty comes in first finding the debtor and secondly, in ensuring the careful preparation of the necessary documentation in order to obtain a sequestration order from the Federal Court.

The threat of bankruptcy proceedings is often used to put pressure on a recalcitrant debtor.

Debtors

If a person owns property or other valuable assets including pending inheritances, bankruptcy should be avoided wherever possible. In many cases, representations to a creditor seeking to enter into a scheme or an arrangement for repayment of a portion or the whole of the debt either in a lump sum or by instalments can be successfully negotiated thereby avoiding bankruptcy proceedings. When a person is declared bankrupt there are many restrictions placed on them, including where they reside, their ability to earn and retain income, restrictions on travel outside Australia and the stigma of being declared a bankrupt person.

Debtors should also be aware that in some cases, the creditor’s claim may be disputed at the Federal Court in the Bankruptcy Division. At the stage where bankruptcy proceedings have been commenced, the ability to dispute the debt is limited and strict rules apply, but, in some circumstances where the dispute is genuine it is relatively straightforward for a debtor to resist a Sequestration (Bankruptcy) Order.