What is corporate insolvency?
A company is considered insolvent when it is unable to pay its debts when they fall due and payable and has been unable to do so for some time.
Corporate insolvency can occur for a number of reasons including macroeconomic conditions and changes to the company’s circumstances. If your company is facing financial stress, we can assist with insolvency procedures by assessing your company and determine its financial position and the options available.
Quicklink to: Voluntary Administration | Liquidation
Voluntary administration
Voluntary administration commences when a voluntary administrator is appointed to take control of the company with the aim of working out an agreement with creditors to maximise the chances of saving the company’s business and to provide for a better outcome than if the company were to be placed straight into liquidation.
If it is not possible to reach such an agreement with creditors, the company may be placed in liquidation.
Liquidation
There are two types of insolvent liquidation, a creditors’ voluntary liquidation or a court liquidation.
A creditors’ voluntary liquidation begins either when creditors vote for liquidation following voluntary administration or when an insolvent company’s shareholders determine to liquidate the company and appoint a liquidator.
The liquidator has a duty to the company’s creditors to collect, protect and realise a company’s assets, and to investigate and report on the company’s affairs, including any possible claims against the company’s officers.
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