Corporate Insolvency Services

Formal Insolvency Appointments

When a company is experiencing financial distress, a formal appointment may be the best option. Registered Liquidators at our firm are available to consent to or provide advice in relation to the following appointments:

• Voluntary Administration
• Creditors Voluntary Liquidation
• Simplified Liquidation
• Court Liquidation

Insolvency Warning Signs

Courts have recognised these items as potential indicators of insolvency. The earlier you seek advice from a registered insolvency practitioner, the better the outcome is likely to be.

If a company is experiencing some of the following, it may be insolvent:

• Continuing losses;
• Liquidity ratios below 1;
• Overdue Commonwealth and State taxes;
• Dishonoured cheques;
• Issuing of post-dated cheques;
• Suppliers placing the business on COD or otherwise demanding special payments before resuming supply;
• Creditors unpaid outside trading terms;
• Special arrangements with selected creditors;
• Payments to creditors of rounded sums that are not reconcilable to specific invoices;
• Solicitors’ letters, summonses, judgments or warrants issued against the company;
• Inability to produce timely and accurate financial information to display the company’s trading performance and financial position and make reliable forecasts;
• Poor relationship with present Bank, including inability to borrow further funds;
• No access to alternative finance;
• Inability to raise further equity capital (See: ASIC v Plymin – SUPREME COURT OF VICTORIA 2003)

Director Penalty Notices (DPNs)

If you receive a DPN, it's important that you respond within 21 days to avoid recovery action by the ATO.

The Australian Taxation Office (ATO) may issue a director with a DPN for the following unpaid company liabilities:

• Pay-as-you-go withholding tax (PAYGW);
• Goods and services tax (GST);
• Superannuation guarantee charge (SGC).

Whether a director becomes personally liable for the amount(s) stated on the DPN depends on the following factors:

• If the unpaid PAYGW and GST have been reported within 3 months of the due date,
• If the unpaid SGC has been reported by the due date,
• If appropriate actions have been taken by the director(s) following receipt of a DPN;
• If the director(s) has a defence that can be evidenced by supporting documentation.

If the liabilities have not been reported within the above timeframes, the only option available to avoid personal liability is to pay the debt(s).

If the liabilities have been reported within the above timeframes, the options available are:

• Pay the debt(s);
• Appoint an administrator;
• Appoint a small business restructuring practitioner;
• Take steps to wind the company up.