Insolvency Law and Practice – A Comprehensive Guide
Insolvency law and practice in Australia are governed by laws and regulations that provide a framework for managing financial distress. Understanding the insolvency process, voluntary administration, and the laws that govern them is crucial for companies and individuals facing financial difficulties.
At the Insolvency Advisory Centre, our expert team of AFSA and ASIC registered advisers with over 30 years of experience can guide you through the complexities of insolvency and help you understand the legal framework of insolvency, including what it is, the insolvency process, and the role of insolvency practitioners.
What is Insolvency?
Insolvency is a financial state in which a company cannot pay their debts. This can be caused by a range of factors, including poor financial management, economic downturns, or unexpected events such as loss of sales, cash flow issues or tax obligations falling due.
The Insolvency Process
The insolvency process involves several stages, including voluntary administration and company liquidation. Each step has its own set of rules and procedures, set out in the Corporations Act 2001 and the Bankruptcy Act 1966.
Voluntary Administration
Voluntary administration is a process that enables a company to continue trading while it restructures its affairs and avoids liquidation. The process involves appointing an external administrator who takes control of the company and assesses its financial position. The administrator then develops a proposal for a Deed of Company Arrangement (DOCA) that outlines how the company will repay its debts and restructure its affairs.
Company Liquidation
When a company becomes insolvent, it may enter voluntary administration, but if there is no option to save the company by restructuring, it will be placed into liquidation, which involves the sale of its assets to repay its debts to creditors.
Insolvent Trading
Insolvent trading occurs when a company continues to trade while insolvent. Insolvent trading is illegal in Australia and can result in company directors being held personally liable for the company’s debts.
Insolvency Practitioners
Insolvency practitioners are professionals appointed to oversee the insolvency process. Depending on the nature of the insolvency, they may be appointed as administrators, liquidators, or trustees. At the Insolvency Advisory Centre, our expert team of AFSA and ASIC registered advisers can act as administrators, liquidators, or trustees in insolvency and liquidation.
Insolvency and Liquidation
Insolvency and liquidation are two related but distinct concepts in Australia. Insolvency refers to the financial state of a company or individual that cannot pay its debts, while liquidation refers to and involves the sale of a company’s or individual’s assets to repay debts.
Need more information about Insolvency Law and Practice? Our Insolvency Comprehensive Guide Can Help
“Insolvency law and practise in Australia are complex, but understanding the insolvency process, voluntary administration, and liquidation, and the laws that govern them are essential for navigating the legal framework of insolvency and liquidation. The Insolvency Advisory Centre offers information and advice to help companies make informed decisions about their financial future by understanding the legal framework.
Insolvency, voluntary administration, or liquidation may be your best options if your company is drowning in debt and constantly stressed over its financial future. If you need insolvency advice in Sydney, Melbourne, Brisbane, Perth or anywhere around Australia, we can help you make informed choices and choose your path to financial freedom. Our fees start from $850, offering you exceptional value for our professional services. Contact us now to speak with one of our experienced insolvency specialists, and let us help you get back on track with a fresh financial start.”
Andrew Bell Insolvency Advisor
Get a complimentary first consultation by calling 1300 887 210.
We can help you navigate the legal complexities of Insolvency and Liquidation by helping you wind down business operations or support during Business Restructuring. Voluntary Administration or Company Liquidation.