Insolvent

Insolvent describes a situation where a business or company is unable to pay debts when they fall due for payment. Insolvency is a derivative of the word insolvent.

An insolvent company is one that is unable to pay all debts when they fall due for payment. There are serious penalties for directors and officers allowing a company to trade while insolvent.

If you suspect that your business or company is in financial difficulty, telephone us or your accountant as early as possible, as this increases the likelihood of a company surviving. One of the common reasons for the inability to save a business or company in financial distress is that specialist advice is sought too late.

Specialist insolvency practitioners can conduct a solvency review of your business or company and outline available options. You need to be aware of the options to make informed decisions about the future of a business or company. Options include refinancing, restructuring or changing your company’s activities, or appointing a liquidator or voluntary administrator.

Signs that may indicate a business or company is at risk of insolvency are numerous.

Signs include ongoing losses, poor cash flow, absence of business plan, incomplete financial records or disorganized internal accounting procedures, lack of cash flow forecasts and other budgets, increasing debt (liabilities greater than assets), problems selling stock or collecting debtors, unrecoverable loans to associated parties, creditors and suppliers unpaid and outside usual terms, solicitors’ letters demands summonses judgments or warrants issued, suppliers imposing cash-on-delivery terms, issuing post-dated cheques or dishonouring cheques, special arrangements with selected creditors, payments to creditors of rounded sums that are not reconcilable to specific invoices, overdraft limit reached or defaults on loan or interest payments, problems obtaining finance, change of bank lender or increased monitoring/involvement of financier, inability to raise funds from shareholders, overdue taxes and superannuation liabilities, Board disputes and director resignations or loss of management personnel, Increased level of complaints or queries raised with suppliers, and an unrealistic expectation that the next big job/sale/contract/ will save the company.

This information is not a substitute for advice concerning your circumstances. Liability limited by a Scheme approved under the Professional Standards Legislation. 

ATO Debt l ATO Director Penalty Notice l Director Penalty Notice l Bankruptcy l Business Bankruptcy
Business Failure l Company Administration l Company Bankrupt l Company Debt l Company Liquidation
Deed of Company Arrangement l Insolvency l Insolvency Advice l Insolvency Specialist l Insolvent
Insolvent Trading l Liquidation l Liquidators l Small business bankruptcy l Statutory demand l Tax audit
Tax debt l Tax debt help l Unpaid tax l Voluntary Administration