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The May 2019 insolvency statistics have been published by the Australian Securities & Investments Commission (ASIC) and What Is Liquidation? has summarised some key points about what’s happening in the insolvency market.  

According to ASIC’s statistics there are 654 registered Liquidators in Australia as at May 2019 and 250 of them are placed in NSW. The table below provides a breakdown of the location of registered Liquidators.

if your company is facing financial difficulties, don’t bury your head in the sand, seek professional advice from a Liquidator (Insolvency Practitioner) to work out if voluntarily liquidating your company is the best option for you.

It is very common for directors to voluntarily liquidate their company and one popular option is a Creditors Voluntary Liquidation. This option is better than one or more of your company’s creditors taking legal action and placing your company into Liquidation.

When you are faced with placing your company into Liquidation (mainly a Creditors Voluntary Liquidation) in Australia there are a range of issues that need to be addressed. The way you liquidate your company in Australia will vary depending the specific circumstances of your company.

If you are considering placing your company into Liquidation don’t overlook the experience of the Liquidator (Insolvency Specialist) themselves and their ability to liquidate your company in Australia.

Directors looking to place their company into Voluntary Administration often ask how long the Voluntary Administration process will last. The quick answer to this is between 20 to 25 business days only if there a no complexities involved and the creditors decide to place the company into Liquidation, or the Voluntary Administration should end.

To get a better understanding of the Voluntary Administration process What Is Liquidation? have detailed the key steps and timeframes in a Voluntary Administration.

It is essential for Company directors to be aware that when a Receiver has been appointed to your company (or if you suspect that a Receiver may be appointed), that a Receiver may sell your company property (i.e. Company assets) to pay back the debt owing to the secured creditor.

A Receiver will generally have a wide range of powers to sell Company assets on such terms a Receiver thinks fit, and this will include selecting the appropriate method of sale.

Every year, Australian directors turn to us when they need assistance in resolving their company’s financial difficulties and in most cases when no action is undertaken, there is a strong possibility that a creditor will enforce a formal insolvency procedure (i.e. Receivership or even Liquidation).

At What Is Liquidation we have seen a thing or two of creditor intentions to recover money owed to them even if it means the sale of a business or any valuable assets to pay back what is due to them.

Then there is the scenario of a Voluntary Administration, that provides immediate protection to your company giving the time the Voluntary Administrator needs to help formulate a business plan to save your company, but the only catch is the Voluntary Administrator will take control of your company.

As a company director you most likely do not want to be in a position where your company is heading towards a formal insolvency appointment (i.e. Liquidation or Voluntary Administration) because one of the main concerns could be around what this may mean to the employees of your company.

Breaking the news to your employees can be a stressful and difficult task, because there is the real possibility of closing the doors to your company and leaving your employees without a job.

So how and when is the best time to break the news? There is never a ‘good time’ but once the future of your company has been determined, employees should be advised in a timely manner (as soon as possible).

It has just been over a year now since the commencement of the new rules relating to creditors’ rights under the Insolvency Law Reform Act 2016 and the Insolvency Practice Rules which came into effect in September 2017. This has resulted in increased powers for creditors involved in External Administrations.

In this article the term ‘External Administrator’ relates to Liquidators, Voluntary Administrators and Deed Administrators and ‘External Administration’ has an associated meaning.

In our previous blog article, we introduced safe harbour and it’s benefits and the effect of restricting the enforceability of certain ipso facto clauses. This article will guide directors as to what they should be aware of relating to safe harbour.

Let us refresh your memory about safe harbour: designed to offer more protection to company directors and make it easier to restructure uncertain financial businesses. Safe harbour would apply to directors of companies undertaking a restructure, and would protect them from personal liability for insolvent trading laws in certain circumstances.

Back in September 2017, the Government changed Australian insolvency laws, some of these changes included:

  • The introduction of Safe Harbour protection for company directors facing insolvency.
  • Restricting the enforceability of certain Ipso Facto clauses.

As a director, you are probably thinking how does this affect me as a company director? Australian law imposes a duty on company directors to prevent a company from trading whilst insolvent. If you are a director, you can be personally liable for any debts incurred by a company trading whilst insolvent and might also have civil or criminal penalties imposed against you.