Bankruptcy and insolvency are concepts that can be confused as meaning the same thing or are not properly understood. A brief discussion of these concepts, their implications, and how RCR is able to assist you is outlined below.
What is bankruptcy?
Bankruptcy is when a person who cannot pay their debts gives up their assets and control of their finances (either by agreement or court order) in exchange for protection from legal action by their creditors.
What is Insolvency?
Insolvency is the inability of companies to pay debts as and when they are due.
What is liquidation?
Liquidation is the process of winding up an insolvent company. Winding up is when a liquidator assumes control of a company’s assets and uses them to offset the money owed to creditors.
Below are some of the common questions regarding the insolvency process.
Who can file for insolvency?
You do not file for insolvency. Insolvency is a state that a company finds itself in when it is unable to pay its debts and a Liquidator assumes control of the company. Liquidation is generally entered voluntarily or through a court order.
What is an insolvency process?
Several options are available to an insolvent company. The most common procedures for an insolvent company are liquidation, voluntary administration, and receivership.
What are the insolvency directors’ duties?
When a company becomes insolvent, directors have a number of duties. Notably, they have a duty to prevent their insolvent company from trading.
Who is the insolvency trustee?
This is not a common term, but can most accurately be identified as being the administrator or liquidator that is respectfully appointed voluntarily or through a court order for the insolvent company.
What does an insolvency lawyer do?
Insolvency lawyers can be engaged in all stages of the insolvency process, from negotiating company voluntary arrangements to administration and receivership.
Some of the stages we can assist in regarding insolvency are as follows:
- Advice on the process of entering into voluntary administration;
- Advice on a Winding Up Application or if the Company has gone into Liquidation;
- Preparing and filing a Statutory Demand;
- Preparing and filing a Winding Up Application;
- Attendance at Court Hearings for the Winding Up Hearing, whether as a Creditor or a Supporting Creditor;
- Advice to trustees on steps required to be taken under voluntary administration or liquidation;
- Attendance at Court on behalf of a Liquidator/Trustee;
- Advice on dispute insolvent trading acting for directors or trustees;
- Advice on or preparation of preference claims; and
- Advice on or preparation of lodging a proof of debt with a Liquidator/Trustee.
We can further assist in the following with respect to the bankruptcy process:
- Advice on the Bankruptcy process (e.g. if you are served with a Bankruptcy Notice what steps must you take);
- Preparing a Bankruptcy Notice on a debtor;
- Discussions and Negotiations with the debtor on payment of the debt;
- Considering and reviewing the debtor’s financial position;
- Preparing and issuing Creditor’s Petition;
- Attendance at Court Hearings for a Creditor’s Petition, whether as a Creditor or a Supporting Creditor;
- Attendance at Court Hearings and/or preparing submissions for a Review Hearing of a Sequestration Order.
RCR is incredibly experienced and widely recognized for its unmatched service in bankruptcy and insolvency matters, as well as other areas of law. If you require an Insolvency lawyer and/or Bankruptcy lawyers in Brisbane and Sydney based, who are able to assist you with all of your debt, bankruptcy, restructuring, and insolvency inquiries, please do not hesitate to contact us.
The blog published by Rostron Carlyle Rojas Lawyers is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the author. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult RCR on any legal queries concerning a specific situation.