Insolvency, Bankruptcy & Risk Management
Obtaining sound legal advice when setting up your business structure will reduce the risk of exposing of directors and business owners to liabilities.
At Cyngler Kaye Levy Lawyers we can guide you through the various paths to minimise your exposure to risk.
Regularly reviewing your exposure to risk is necessary to ensure you are not unduly liable for others/other parties debts or deficiencies in obligations.
Please see our section on for Legal Structures more details.
Insolvency & Bankruptcy
If you are experiencing financial difficulty, we are able to assist in:-
- winding up companies
- declaring bankruptcy
- fighting debts
- debt restructuring
What is Insolvent Trading?
Directors have a positive duty to prevent their company from trading if it is insolvent, that is, when it is unable to pay its debts as and when they fall due.
What are the main consequences of trading whilst Insolvent?
- Civil Penalties against Directors of up to $200,000.00;
- Potential Compensation proceedings by impacted Creditors;
- Criminal charges if dishonesty present; and/or
- Potential disqualification as Director.
3 key forms of company insolvency
- Voluntary Administration is where action is taken by a Director/s of the company and may lead to a Deed of Company Arrangement.
- Liquidation may be action by Director/s, Creditor/s, ASIC or shareholders (winding up proceedings through court) and involves 3 types of liquidation: Court Liquidation, Creditors’ Voluntary Liquidation & Company wound up by an external person/body (liquidator)
- Receivership is action taken out by a Secured Creditor/s and involves collection and selling sufficient assets to discharge the debt owed to the Secured Creditor.
Directors typically have continuing obligations to assist the External Administrator.
We work closely with Solvency and Forensic Accountants to assist you to unravel your indebtedness and liability exposure.
At Cyngler Kaye Levy Lawyers we are able to assist you to defend insolvency claims taken against your business. Please see our section on Civil Litigation for more details.
What is bankruptcy? Bankruptcy is when you are unable to meet your debts as and when they arise and cannot reach an agreement with your secured and unsecured creditors.
Voluntary Bankruptcy: You may choose to voluntarily become bankrupt. This is referred to as a Debtor’s Petition.
Court Ordered Bankruptcy: If a creditor has obtained a judgment against you from an Australian court for an amount equal to or greater than $5,000.00 within the last six (6) years, they may take action to have you declared bankrupt (bankruptcy notice followed by a sequestration order).
Bankruptcy lasts for three (3) years but can be extended in certain circumstances.
Q. What are your options when faced with possible Bankruptcy?
At Cyngler Kaye Levy Lawyers, we are able to provide advice on which of the following options is best suited to your situation or advice on your ability to challenge/dispute debts and/or Creditors making you bankrupt:
- Informal Arrangements
- Formal Arrangements
- Declaration of intention to present a debtor’s petition
- Debt Agreement
- Voluntary Bankruptcy
- Creditors making you bankrupt
- Personal Insolvency Agreement
Q. What are the adverse consequences of Bankruptcy?
- Your bankruptcy will be recorded on the National Personal Insolvency Index (the NPII) forever. The NPII can be searched by anyone.
- The Trustee to administer your bankruptcy will:
- Sell your assets, certain exceptions apply;
- Retain income you earn over a certain allowable amount; and
- Investigate your financial affairs.
Commercial Credit Reporting Agencies can keep a record of your bankruptcy for a period of up to five (5) years.
Will not be able to travel overseas without written permission from your trustee.
Some debts are not covered by bankruptcy, e.g. penalties, fines and child support payments.
Ability to obtain future credit will be affected.
In order to have services connected you will likely be required to pay a bond
Please do not hesitate to contact our experienced Commercial & Litigation Lawyers on +61 3 9500 1722, request a cost estimate or email an enquiry.