Liquidation & Bankruptcy Lawyers

Insolvency is the term used when an individual or business can no longer pay their debts and meet their financial obligations. Insolvency is a state of financial stress and can arise from various situations that lead to poor cash flow.

In Australia, it is illegal to trade while insolvent as per the Corporations Act. 

When faced with insolvent trading, an individual or business can contact creditors or lenders to make alternative payment arrangements in order to try to pay debts off. If you have creditors chasing you and are unable to make alternative arrangements, it is important to obtain trusted legal advice to determine the best strategy for you and your business.

There are some common indicators to be aware of that may show a business is insolvent, or on the verge of insolvency.

These include:

1. Where business debts outweigh assets
2. Profit margins are declining
3. Special arrangements have had to be made with creditors and lenders
4. Ongoing financial losses 
5. Creditors are unpaid
6. Business instability has caused a loss of staff
7. Business assets have had to be sold off to pay debts
8. Taxes are overdue
9. There is an inability to create reliable forecasts
10. Inability to raise further equity capital
11. Unable to borrow additional funds from your current lender

There are a number of alternative informal solutions which can be implemented with your creditors with a view to avoid bankruptcy or liquidation, including:

• Informal arrangements and settlements with creditors;
• Payment arrangements with the ATO;
• Restructuring your debt;
• Business turnaround strategies.

We can help you negotiate with creditors on the terms around restructuring and repaying your debts so that all parties ultimately benefit. 

In addition to informal options, there are more formal options also available to businesses, including:

• Safe Harbour: giving company directors the opportunity to seek proper advice, to develop and implement an action plan to achieve a better outcome for the company and its creditors;
• Voluntary Administration: to assist an insolvent company satisfy its debts by ensuring that it can either come to a formal arrangement with its creditors to pay debts or be placed into liquidation;
• Voluntary Wind Up: where a company voluntarily liquidates company assets to satisfy outstanding debts.

Our team can help you mitigate the risks associated with insolvent trading, director’s liabilities and director penalty notices. Contact us any time on 1800 621 071 to discuss your options and find out where you stand.

In a domestic relationship, it’s common to own a property jointly as joint tenants. If your partner has become bankrupt, the bankruptcy automatically severs the joint tenancy and your bankrupt partner’s interest in the property becomes vested in his or her trustee in bankruptcy.  If you don’t want to lose your home, there are options available to you. It is imperative to get the right advice as soon as possible so that the best options can be at your disposal.

If you’ve been paid for a debt after a company has gone into liquidation or a person has declared bankruptcy, it is not uncommon for a liquidator and/or trustee to clawback funds that are alleged as preferential or as an uncommercial transaction. There are ways to defend these claims. To discuss your specific matter, call 1800 621 071 and our dispute resolution specialists will be able to help you identify the best course of action.

The short answer is yes. Obviously, there are various factors that must be taken into consideration including the asset position of the director upon whom you intend to enforce the guarantee (who has usually just lost their only source of income) and of course the validity of the guarantee. However, there are always recovery options available to you which should be reviewed immediately to ensure that your interest is protected.