Even when the situation is desperate, liquidation is not your only option. It is only one in a range of options that are available.

An unplanned liquidation may not only be a traumatic experience, it may be the wrong decision for you – no matter the price.

So before you make a decision on a low cost liquidation based on price alone, take a moment to understand the risks of liquidation and to investigate the alternate choices that are available to you.

Call The Insolvency Experts on 1300 767 525

Company Insolvency – What is it?

A company is considered to be insolvent if it is unable to pay its debts.

Company insolvency may be determined in 2 ways;

• The Cash-flow Test – is the company now, or will it become unable to pay its debts as and when they fall due for payment
• The Balance Sheet Test – are the company’s liabilities greater than it’s assets

When a company is insolvent and unable to pay it’s debts, the ASIC and the Corporations Act requires a director to address the question of insolvency in a timely and responsible manner strattera dosage.

Further, the law imposes a positive duty upon the director to avoid trading while insolvent. This means that before a new debt is incurred, directors must be able to satisfy themselves that the debt can be paid as and when it falls due for payment.

While company insolvency places positive legal duties on directors, there is no legal obligation to spend your own money to place a company into liquidation. Often a company does not have funds to appoint a liquidator.

So what are the choices?

Company Insolvency – Informal Options

Company insolvency may be addressed informally in a number of ways.

1. Trade on but on a COD basis – you should not worsen the situation of the company or its creditors.
2. Make individual or group arrangements with creditors to reschedule the debt to a level where the company can be considered solvent
3. Introduce new funds into the company
4. Raise equity
5. Introduce new partners
6. consider selling selected, non essential assets of the company to raise funds
7. Sell the business of the company to discharge debts
8. Cease trading

Company Insolvency – Formal Options

Company insolvency may be formally addressed by the appointment of ;

1. A Voluntary Administrator selected by the directors.
2. A Liquidator in a Creditors Voluntary Liquidation
3. An Official Liquidator by the Court on the petition of an aggrieved creditor owed more than $2,000
4. A Receiver or Receiver and Manager by a secured creditor
5. A Provisional Liquidator
6. an external administrator by the ASIC

The role of the liquidator

The liquidator in any formal appointment must investigate the affairs of the company and the conduct of the directors including their use of company funds and property.

If the directors have breached the Corporations Act, the liquidator must report those breaches to the ASIC.

A liquidator acts on behalf of the creditors of a company and will therefore take steps to:

• protect and realise the assets of the company;
• investigate and examine the affairs of the insolvent company
• investigate the transactions the company has been involved in
• report to ASIC on insolvent trading by the directors
• report any other offences committed under the Corporations Act;
• prosecute directors who fail to maintain company books and records
• assess legal actions available to the company including insolvent trading or misuse of company assets by the directors

Call The Insolvency Experts

1300 767 525 anytime