What are insolvency issues?
Usually insolvency means that the individual or party is suffering ongoing loss and is unable to comply with the financial demands that is must comply with. If a company or individual continues have insolvency issues such as cash flow problems or an inability to pay its debts, a resulting effect can be where the company is then found to be in liquidation.
Liquidation is when a liquidator is appointed and the company’s assets are then sold to pay off all creditors that are owed money. Any excess that remains after paying the bills are then dispersed amongst company members according to their claims. Excess funds are paid out in accordance with priorities that are set out by the law.
If a company is in serious debt it may be forcibly wound up by a liquidator but in certain cases a company can choose to go into voluntary administration.
If the liquidation is compulsory then the court will appoint a liquidator to wind up the company’s assets, usually an accountant or finance professional who is equipped for the job will take up this role. The liquidator will examine the financial situation of the company and determine if there are assets that can be sold to pay off creditors of whether any outstanding monies owed to the company can be recovered.
Company assets does not necessarily remain property of the company as they may need to be used to pay off some of the debts. Any creditors who can prove that they are owed money by the company must make a formal claim for company assets and register themselves as a creditor.
Usually a ranking system will ensure that secured creditors will be paid first and then any other creditors will be subsequently paid off with the assets that the liquidator has at its disposal.
With any insolvency issues it is important to note that payment of creditors may not be immediate and it can be a lengthy process working out who is owed what. First and foremost the expense of liquidation process are covered by the company and then any claims by administrators are paid.
Unsecured creditors are general the last class of creditors that are covered with expenses incurred for deferred expenses, wages, superannuation contributions and retrenchment payments to employees ranking higher.
In some cases the company may still be salvageable and once debts are paid out then the company may be able to resume operation if its finances are back in order. However, if a company is unable to get its finances back in order it may then be wound up and liquidated and will no longer exist.
If your company may be potentially facing insolvency issues it is best to seek the advice of a lawyer as soon as possible as there may be voluntary administration options or alternative options to a court ordered liquidator.
What should I do if I am facing insolvency issues?
If you or your company are facing insolvency you should seek legal advice immediately.
While you may be under a lot of pressure and be stressed about your insolvency issues it is best to seek the advice of an insolvency expert who can give you tailored advice for your situation.
It is better not to delay contacting a lawyer as seeking legal advice earlier on in the process can help manage the situation from the outset. If you or your company think that you may face insolvency issues, contact one of our insolvency experts today.
What can Moisson Lawyers do for me if I am facing insolvency issues?
Moisson Insolvency Lawyers is committed to providing the highest level insolvency advice for individuals and businesses that are facing insolvency issues.
We offer flexible payment plans for our legal services and understand that you are going through a difficult time. Our cost effective strategies for managing your insolvency issues will ensure that your company’s most sensitive issues are taken care of by lawyers with years of experience with the issues you may be facing.
Call one of our insolvency lawyers today to see what we can do to help solve your insolvency issues.
Get In Touch With Us For A Free Quote:
Tel 1800 664 776