Determining when a company is insolvent can be quite complex, so professional advice should always be sought. However, as a brief overview, a company is insolvent when it is unable to pay amounts it owes to creditors when they become due and payable.
Directors of companies are duty-bound to prevent their company from trading if it is insolvent. If a company continues to trade whilst insolvent, the director (or directors) are guilty of insolvent trading and may be liable to pay penalties. They may also be personally liable for the debts that are incurred by the company!
To pursue a claim against the director for insolvent trading, it is important to establish the following:
An insolvent trading claim against a director is limited to the amount of any unpaid debt(s) which the company incurred whilst it was insolvent. The director does not automatically become liable to satisfy all unpaid debts of the company.
Successful claims may result in a director being disqualified from managing a company, fined up to $200,000 and/or ordered to pay compensation. In some cases, criminal proceedings may also follow.
In defending a claim for insolvent trading, directors must be able to show one or more of the following:
If you are making a claim against someone for insolvent trading or you are a company director being pursued for insolvent trading, you will require professional advice with respect to this complex area of the law.
Contact Axia Litigation Lawyers direct and speak with an expert today.
Axia Litigation Lawyers are experts in dispute resolution and litigation.
Contact us today to understand how you can effectively and efficiently reach a resolution in your matter.
Axia Lawyers are an excellent litigation firm that handle cases in a professional manner and pay attention to details. The customer service was outstanding, I would highly recommend this firm.
After my initial consultation with Axia Litigation Lawyers, I felt the tension and stress fall away. They were both compassionate and understanding of my case and were diligent and thorough in their work ethic.
We have used Axia Legal on two occasions over the last three years with great success and I am happy to recommend Adam Brown from Axia Legal
Adam and staff have been very helpful throughout the whole process. Very happy with the service and final outcome.
Thank you for your outstanding help & I couldn't be happier with the help AXIA have given me.
I have no hesitation in recommending them. They were always very informative and answered all of my questions and always kept me in the loop and well informed of my progress.
After multiple attempts at trying to find reliable counsel in Australia to act on an advisory basis to our firm, we found ourselves feeling reassured and feel as though we have gained a solid ally with Axia Litigation.
The team at Axia Litigation were first class, when guiding us through two consecutive legal matters. We received regular communication, with each of the legal steps explained in full.
Axia were competent, diligent and excellent to work with.