Insolvency & Bankruptcy

Obviously there are a number of technical definitions as to what amounts to insolvency and bankruptcy. Irrespective problems are encountered when an individual or entity is unable to pay their debts as they fall due.   There may be a number of reasons for this including a loss of or delayed cash flow or the size or timing within which debts have to be paid. Unfortunately many debtors fail to prioritise the manner in which their indebtedness is to be addressed and whether or not some form of instalment arrangement should be entered into with creditors. As the debt ages creditors endeavour to have the debt(s) paid failing which they may engage commercial agents or lawyers to pursue the debt. If direct contact is not successful then a letter(s) of demand is dispatched and if disregarded normally court proceedings ensue.

Initiating process is by way of statement of claim or garnishee where individuals are involved or by way of statement of claim or a statutory demand with companies. Apart from voluntary liquidation, once a judgement debt and a certificate of judgement have been obtained from the relevant court these can be enforced leading to bankruptcy or liquidation depending on the entity concerned. Bankruptcy has serious ramifications for those involved and can lead to the bankrupt’s affairs being administered for a period of up to seven years. Either voluntary liquidation or liquidation means that the company is wound up and ceases to exist as an independent, legal personality. Irrespective of the circumstances the credit of the individual or entity is destroyed for a period of time imposing onus credit restrictions on those involved.

Where companies run into financial trouble and continue to trade they are involved in insolvent trading which is where they have insufficient funds to meet their debts as they fall due. In these circumstances directors of the company become personally liable and may be called upon by creditors to satisfy the debts of the company. Unfortunately over the last 10 years there has been an increase in phoenix company activity. This is where one company transfers all its business assets to another company winding up the first company hoping to avoid paying its creditors. 

At LAC Lawyers we do not undertake any insolvency and bankruptcy work where the amount of the debt owing is less than $20,000. During the course of the global financial crisis there has been a severe downturn in business which has led to many people losing their employment and companies incurring debts which they cannot pay. Given that there are serious consequences for directors of companies they need to be mindful that early intervention is required and the first step they should take is to satisfy themselves about the financial position of the company following which they should seek independent legal advice not only about the company’s position but their circumstances as well given that they could be held liable for the company’s debts.

LAC Lawyers works closely with our clients in an endeavour to achieve the best possible results for them in this difficult area. LAC Lawyers will advise secured and unsecured creditors, companies and individuals and their exposures and what consequences this may have for their organisation or personally. We also act on behalf of insolvency practitioners in both bankruptcy and company liquidation matters. Irrespective of what your circumstances are we may be able to assist to protect you from the harshest aspects of bankruptcy or insolvency or if you are an insolvency practitioner to assist you to recover monies from debtors or company directors as appropriate. Should you require professional advice and representation with respect to any debt recovery, bankruptcy or insolvency matter please do not hesitate to contact us now by phone or email.

Contact us now for Fast, Accurate and Timely legal advice

Phone LAC Lawyers on NSW 1300 799 888 or VIC 1300 734 638 or send us an email