There are two types of insolvency: company insolvency and personal insolvency.
This will involve initially the service on the company of a Statutory Demand for Payment of Debt. This is used either following a court judgment or if the debt cannot be disputed and provided the debt is for at least $2500.
The company will have 21 days to apply to have the statutory demand set aside, provided there are valid grounds.
Otherwise, if there is not a satisfactory arrangement made with the creditor (being the party to whom the money is owned), the creditor will have the right to start wind proceedings in either the Supreme Court of Victoria or Federal Court of Australia.
The end result is that if the debt is due and payable, the Company will be wound up and a liquidator will be appointed.
Intelligent legal advice on either side of the process can assist in preventing a company being wound up and result in the debtor getting paid.
Personal Insolvency ultimately results in an arrangement with creditors such as Part Nine or Part Ten Agreement, or bankruptcy.
Prior to that time, there will typically have been legal proceedings and a court judgment for the debt amount plus costs and interest.
The bankruptcy process can be a swift one. Once a court judgment is obtained, it can be a very effective tool in getting the debtor to pay. A person served with a Bankruptcy Notice must take the matter seriously and will be well served to seek expert legal advice.
PCL Lawyers offers insolvency advice and pre-insolvency advice. Sometimes company liquidation or personal bankruptcy is not the only resolution. Timely and appropriate legal advice at this time will likely be of great assistance.
To discuss you situation please either call us on 1300 907 335 or complete the contact form on this page.
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