top of page

Corporate Insolvency

Many companies experience financial problems. It can happen for a variety of reasons. Recognising the signs and seeking advice from an experienced insolvency professional is key to the company's ability to continue in existence and to minimise personal liability for company officers.

Warning Signs
Courts have recognised these factors as potential indicators of insolvency.    The earlier you seek advice from registered insolvency practitioners, like us, the better the outcome is likely to be.

If a company is experiencing some of the following items, it may be insolvent:

  • Continuing losses;

  • Liquidity ratios below 1;

  • Overdue Commonwealth and State taxes;

  • Dishonoured cheques;

  • Issuing of post-dated cheques;

  • Suppliers placing [company] on COD, or otherwise demanding special payments before resuming supply;

  • Creditors unpaid outside trading terms;

  • Special arrangements with selected creditors; 

  • Payments to creditors of rounded sums which are not reconcilable to specific invoices;

  • Solicitors’ letters, summons[es], judgments or warrants issued against the company;

  • Inability to produce timely and accurate financial information to display the company’s trading performance and financial position and make reliable forecasts;

  • Poor relationship with present Bank, including inability to borrow further funds;

  • No access to alternative finance;

  • Inability to raise further equity capital;

ASIC v Plymin – SUPREME COURT OF VICTORIA [2003] VSC 123 (5 May 2003)

Director Penalty Notices (DPNs)
If you receive a DPN it's important you respond to it within 21 days to avoid recovery action by the ATO.

The Australian Taxation Office (ATO) may issue a director with a DPN for the following unpaid company liabilities:

  • Pay you go withholding tax (PAYGW);

  • Goods and services tax (GST);

  • Superannuation guarantee charge (SGC).

​

Whether a director becomes personally liable for the amount(s) stated on the DPN depends on the following factors:

  • if the unpaid PAYGW and GST have been reported within 3 months of the due date;

  • if the unpaid SGC has been reported by the due date;

  • if appropriate actions have been taken by the director(s) following receipt of a DPN;

  • if the director(s) has a defence that can be evidenced by supporting documentation;

​

If the liabilities have not been reported within the above timeframes, the only option available to avoid personal liability is to pay the debt(s).

​

If the liabilities have been reported within the above timeframes, the options available are:

Formal Insolvency Appointments
 

When a company is experiencing financial distress, a formal appointment may be the best option. Registered Liquidator's at our firm are available to consent to the following appointments:
 

  • Voluntary Administration with a view to entering a Deed of Company Arrangement

  • Creditors Voluntary Liquidation

  • Simplified Liquidation

  • Court Liquidation

bottom of page