Insolvency is the term used when an entity is unable to pay its debts when they fall due for payment. It is generally used in the context of a company, whereas insolvency for a natural person is generally referred to as bankruptcy in Australia. The effect of insolvency is that a company could be wound up, either by its own will or through a creditor’s application.
Some general indicators of a company’s insolvency include poor cash flow, ongoing losses, overdue Commonwealth and state taxes, dishonoured cheques and unpaid creditors outside usual trading terms.
If a company is found to be insolvent, you might need to consider winding-up the company if you are unable to negotiate with creditors. There are three common options available for insolvent companies:
Early intervention is strongly suggested if your company is experiencing financial difficulty and feel free to discuss about the best option you should take with us.
If you are interested in engaging us to assist you, please do not hesitate to contact us on 02 8277 4538 or email@example.com.