Insolvent Trading
Are you a Director concerned about insolvent trading? Here is the bad news - if you're concerned about it and have gone to the trouble to find this page there is a very real chance your company is Trading While Insolvent and you can be personally liable for the company's debts.
You should call us now on (02) 9290 1110 for CONFIDENTIAL FREE ADVICE or fill out the Contact Form and we'll call you.
If you would like to know a bit more before calling, here is a quick explanation of Insolvent trading laws:
- The stick - the Law asks Is the company insolvent? If yes, then the directors must act immediately or they may be personally liable for debts that the company incurs after the date of insolvency.
- The carrot - the Law provides a range of options is available to directors who suspect insolvency and they are designed to save a company.
We provide a very useful online tool at Is my company insolvent? You can do a 2 minute test to get a good understanding of a complicated area of the Law. Also, have a look at The Restructuring Spectrum to get a snapshot of the types of solutions available to companies that are insolvent.
Most importantly, remember that if a company is insolvent, the directors owe a duty of care to creditors as well as shareholders. This is not just good commercial practice, it's the law.
Whilst the overriding principle is easy to understand, this is quite a complicated area of the law. Because it is so important for directors, we have gone into quite a bit of detail in the following pages:
- Insolvent Trading laws
- Definition of Insolvent Trading
- Breaches of Section 588G, Insolvent Trading
- Defences to Insolvent Trading actions
- Penalties for Insolvent Trading
