Insolvency
Insolvencies and bankruptcies have been and remain a fact of life.
Despite the best intentions, people and companies at times cannot pay their debts, leaving creditors to look for other avenues of recovery.
Quinn & Scattini advises both companies undergoing financial difficulties, their directors and creditors who are owed monies.
Such companies need to be aware of their obligations around insolvency and may need legal advice in relation to restructuring to put them in a better position to continue to trade or some form of a deed of company arrangement. Alternatively a company may want to seek voluntary liquidation to conclude its affairs.
Companies
One of the benefits of incorporation is that a company has limited liability for debt. However in exchange for that benefit, a company has range of duties to its creditors.
Compliance with these duties is often called into question in the context of insolvency proceedings. You may need advice as a director of a company in financial difficulties, or as a creditor of such a company. If so, you should contact one of Quinn & Scattini's insolvency lawyers.
A company is insolvent if it cannot pay its debts as they fall due. In this case, the company may be wound up by its debtors or placed by actions of its directors or shareholders into insolvency administration.
In addition to providing legal advice, we maintain relationships with a range of insolvency practitioners and can help you to establish a relationship with an appropriate party.
Winding Up
Winding up involves the appointment of a liquidator. The liquidator then converts the company's assets into cash and distributes the cash to the company's creditors in the order specified under the Corporations Act.
Administration
Alternatively, if there is a prospect that an insolvent company may trade viably in the future, the directors may propose a Deed of Company Arrangement under which the company makes part payment to the creditors in settlement of the company's debts.
An administrator will then be appointed to assess the affairs of the company. If the creditors agree to accept the payment, the company and directors will execute a deed of company arrangement providing for the settlement.
Recovery Proceedings
While many insolvencies are straightforward, others can be extremely complex, particularly where improper transactions have occurred. For example, a company may have traded while insolvent, or have transferred assets out of the company by uncommercial or unfair transactions. Such transactions may be liable to reversal.
Alternatively, Or if there is a likelihood of such transactions occurring in the future, it may be necessary to seek urgent court orders freezing the company's assets (called a "Mareva" injunction) to preserve the property of the company.
Usually these matters are dealt with by the relevant insolvency practitioner. However a major creditor may wish to make its own legal assessment.
Quinn & Scattini also advise insolvency practitioners in undertaking their duties.
If you are involved in an insolvency issues it is important, given the complexity of insolvency law, that you obtain appropriate legal advice in order to ensure legal compliance and secure your rights.
If you would like to find out how Quinn & Scattini can help you, please call us on 1800 999 LAW (1800 999 529), or email us at mail@quinnscattini.com.au
