Insolvency and Liquidation
Lawyers Brisbane

Insolvency and Liquidation Lawyers Brisbane

Our lawyers at JML ROSE have a wealth of experience in dealing with insolvency and liquidation, allowing us to deal with complex issues in a way that achieves a positive outcome for our client, whilst minimising costs.

Insolvency: JML ROSE’S Experience

The JML ROSE litigation team have experience in dealing with a variety of matters, including:

Liquidation:

Liquidation is the winding up of a company’s affairs. There are three types of liquidation: court liquidation, creditors’ voluntary liquidation and members’ voluntary liquidation. Liquidation allows for an insolvent company to have an independent person take over the control of the company and wind it up in a way that benefits the creditors and distributes any surplus between its shareholders.

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Voluntary administration:

An external administrator (voluntary administrator) is appointed in this insolvency process, either by the director(s) or a secured creditor. Voluntary administration allows for companies to put a proposal to the creditors instead of going into liquidation. Voluntary administration allows for the preservation of a company’s structure to provide the best possible result for creditors.

Director Penalty Notices (“DPN”):

A Director Penalty Notice is issued by the Australian Tax Office to a company that is not paying its Pay as You Go (“PAYG”) tax and/or Superannuation Guarantee Charge (“SGC”). The director(s) is warned in a Director Penalty Notice that they have personal responsibility for company tax. They are personally liable to pay a penalty that is equal to the company’s PAYG and/or SGC. The director(s) has 21 days from when the notice is posted to avoid personal liability by either having the company pay the debts, placing the company into voluntary administration or placing the company into liquidation.

Setting aside winding up applications:

A winding up application is the process that precedes the winding up of a company. An authorised person can apply to the court to have a company wound up if it is found to be insolvent. The court must find the company to be insolvent before granting a winding up order. The court is required to find a company insolvent if they fail to comply with a statutory demand.

Contesting statutory demands:

A statutory demand is a demand that is made on a company, requiring that a debt is paid within 21 days. Failure to comply with a statutory demand will result in the company being found insolvent. Our litigation lawyers can help you regardless of whether you are looking to pay the debt, dispute the claim, apply to the court to set aside the statutory demand or settle.

Bankruptcy notices:

A bankruptcy notice is a document issued by the Official Receiver. Within 21 days of the bankruptcy notice being served, the payment must be made or secured, and if you don’t, you will have committed an act of bankruptcy. The creditor that served the bankruptcy notice is able to commence legal proceedings if an act of bankruptcy is committed.

Insolvent trading:

If a company is unable to pay its debts when they are due and payable, it is said to be insolvent. A director can be liable for a debt incurred if a company has already been found to be insolvent. An offence is committed by a director if they permit insolvent trading. The director faces a fine of $220,000, five years imprisonment, or both. If a director has reason to believe that a company is insolvent, they are liable for the same penalties.

Insolvency: Director’s Obligations

In Australia, company directors have considerable obligations pursuant to the Corporations Act. If the director(s) does not act in line with their obligations and duties pursuant to the Corporations Act, the director(s) could be found to have breached their duties, which could be an offence depending on the alleged breach and its nature. The director(s) may also be personally liable for certain debts.

JML ROSE’s insolvency and litigation lawyers can advise directors about the range of options that are available to them. If directors are facing insolvency issues, legal advice should be sought as soon as possible, as the available options tend to diminish over time.

Insolvency: Restructuring a Business

A company has the option to restructure a business when it is likely to become or is already insolvent. However, it is crucial that the correct legal advice is obtained to ensure that the proposed restructure is lawful and that they are acting in accordance with their director’s duties.

JML ROSE can assist in the restructuring of your business. Directors have certain duties and obligations that must be considered in any proposed restructure. There are also often various competing interests to consider (e.g., stakeholders, creditors, debtors). Therefore, before commencing a business restructure, it is vital that the right advice is obtained.

Insolvency: Summary

Our firm has had vast involvement with advising directors in relation to insolvency and liquidation, both for corporate groups and for independent companies. We can give advice  and direction based on our experience, through what can be a distressing period for directors. Our methodology is to ensure that the director complies with every single applicable law, as per their obligations as a director. In these circumstances, it is vital that directors get the correct advice early, so that they are acting in the interests of the company’s creditors and the company.

 

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