Liquidated, Insolvency, Bankruptcy

Insolvency and Bankrupcy Laws

Insolvent trading is one of those things a company investor would aim to avoid at any cost. That's because this situation of incurring obligations (when the company's ability to repay is known to be definitely compromised) opens a company's board and head to liabilities beyond what they have already poured into a company's coffers, striking at their personal assets.

In other words, a company with liabilities running faster than assets does well to pursue options that can save its operations, which may involve resetting debt terms with creditors, or proceeding with a repayment plan under the eye of its creditors, or, in the most serious case, declaring corporate insolvency under bankruptcy laws.



After declaring a company's bankruptcy, the liquidators put business operations on hold, and then either transfer control and ownership of the company to another party, resuming service, or end up tallying the company's remaining assets for distribution to creditors.

Under Australia's bankruptcy laws, a company's creditors can either wait for the company to complete liquidation on a voluntary basis, or enforce their claims on the company's unfulfilled obligations via court order.

With insolvency's complex effects on a company's life, one of the best investments a business in danger can have is hiring the services of a good solicitor working in corporate insolvencies. Solicitors must provide assurance that corporate laws are being followed, and that the company can rely on specialist, personally tailored approaches to the business situation whilst complying with Australian regulations.

Companies under the danger of falling into bankruptcy must be quick on their feet. The longer company directors procrastinate over or delay going into bankrupcy proceeding, what generally happens is that creditors lose more of the company's potential asset value, and for the company owners, the higher the chances of being charged for insolvent trading. Therefore it is to everyone’s advantage that decisions be considered seriously, conferring with an insolvency practitioner at the earliest opportunity. Early contact with creditors to rearrange payments may even avoid the need for liquidation altogether.