Insolvency Lawyers Melbourne

Pursuant to section 588G of the Corporations Act, it’s the company director’s duty to prevent an insolvent company from trading. Otherwise, they could face civil penalties, compensation proceedings, and criminal charges.

Yes, the Australian Financial Security Authority (AFSA) is responsible for the regulation of the insolvency profession, specifically trustees and debt agreement administrators.

You can file bankruptcy even without a lawyer. However, bankruptcy is just one of the formal options available to manage your debt. It’s strongly recommended to seek the help of a qualified lawyer because bankruptcy has both financial and legal consequences.

In Australia, corporate insolvency differs significantly from personal insolvency. For companies registered with the Australian Securities and Investments Commission (ASIC), the ultimate outcome of insolvency is typically liquidation. In contrast, for individuals, the final stage is often bankruptcy, overseen by the Australian Financial Security Authority (AFSA).

When an Australian company faces insolvency or nears this state, several parties may become involved. An administrator, often appointed under Part 5.3A of the Corporations Act 2001, a receiver (potentially appointed by secured creditors), or a liquidator may step in. These appointments usually occur when the company either struggles to meet its financial obligations to creditors on time, or when its total liabilities surpass the value of its assets, as defined in Section 95A of the Corporations Act.

Bankruptcy, governed by the Bankruptcy Act 1966, is a legal procedure that individuals or partnerships (but not companies) in Australia may pursue to address their insolvency. It’s important to note that not every insolvent person will necessarily file for bankruptcy with the Official Receiver. In many cases, alternative solutions exist. For instance, individuals might negotiate informal arrangements with creditors, enter into debt agreements under Part IX of the Bankruptcy Act, or propose Personal Insolvency Agreements under Part X. These options, facilitated by registered trustees, often allow for debt resolution without resorting to full bankruptcy proceedings.

When an Australian company faces financial distress, Voluntary Administration under the Corporations Act 2001 (Cth) offers a potential lifeline. This process involves appointing an independent Administrator to swiftly evaluate the company’s options and potentially avert liquidation.

The appointment of an Administrator can be initiated by various parties, including company directors, secured creditors like banks, or even liquidators from insolvency firms depending on the situation. If viable, the Administrator will strive to keep the business operational, negotiating with creditors ranging from the Australian Taxation Office (ATO) to trade suppliers. The primary outcomes are typically either a Deed of Company Arrangement (DOCA) approved by creditors at a meeting convened under section 439A of the Corporations Act, or the transition into liquidation overseen by the Australian Securities and Investments Commission (ASIC).

While Voluntary Administration can be a strategic path to corporate restructuring, it’s crucial to note that the Administrator’s duty lies with the company and its creditors collectively. Thus, if you’re a creditor or a director registered with ASIC, it’s imperative to seek personalised advice from qualified practitioners, such as those accredited by the Australian Restructuring Insolvency and Turnaround Association (ARITA), before opting for Voluntary Administration. This ensures you fully understand the implications for your individual position within the broader insolvency process.