When your company becomes insolvent, you can expect a number of things outside your control to happen that you might want to know about and understand your rights.
You Receive Invoices or Demands for Payment that you Cannot Pay
If you have overdue invoices or have received a letter of demand threatening legal action, you may wish to consider seeking financial or legal advice to dispute the debt.
Under the Federal governments new small business debt restructuring process, your company is able to appoint a restructuring practitioner to assess whether your company is still viable and propose a restructuring plan to your creditors.
You Are Served with a Statutory Demand.
If your company is served with a statutory demand, you have 21 days to pay back (or arrange payment) of the debt that is demanded, or your company will be 'presumed insolvent' by the Court, which are grounds for the company to be wound up.
The Court Winds Up Your Company
If the Court orders that your company be wound up on the grounds of insolvency, it will appoint a liquidator as an external administrator of the company, who will claw back any voidable transactions under the Corporations Act, distribute the company's assets to its creditors and then deregister the Company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.