BANKRUPTCY + CORPORATE INSOLVENCY

Section 40 of the Bankruptcy Act 1996 (Cth) sets out the various circumstances where a debtor commits an act of bankruptcy. The most common is that a creditor has obtained a judgment (or order) of the Court against the debtor (s 40(g)). Upon obtaining a final judgment (or 2 or more), then the creditor can apply to the Australian Financial Security Authority (AFSA) to issue a bankruptcy notice. Once issued by AFSA, the creditor can serve the notice on the debtor, requiring them to pay the debt. If the debtor fails to do so, the creditor can apply to the Court for an order that the debtor be made bankrupt (sequestration order). Once the debtor is made bankrupt, a trustee will realise the debtors’ funds and assets to attempt to repay the creditors.

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Section 459E of the Corporations Act 2001 (Cth) (Corporations Act) sets out that a person may serve a statutory demand on a company relation to a single debt (or 2 or more debts) owed to the person, that it due and payable and is at least the statutory minimum (presently $4,000.00). A company that is served with a statutory demand must (a) comply with the demand, (b) compound for the debt (reach an agreement with the creditor), or (c) apply to the Court to set aside the statutory demand.

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Pursuant to section 459F of the Corporations Act within the compliance period (commonly 21 days), then the company is taken to fail to comply with the demand. As a result, the company is presumed insolvent in accordance with section 459C of the Corporations Act, allowing the creditor to commence proceedings to wind the company up (section 459A of the Corporations Act).

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At Odyssey Legal, we understand that bankruptcy and corporate insolvency disputes can be overwhelming and stressful, particularly as they both commonly relate to a debtor that has refused to pay.

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Our expert bankruptcy and corporate insolvency lawyers can assist with:

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1. Issuing a bankruptcy notice against an individual for an outstanding debt;

2. Issuing a statutory demand against a company for an outstanding debt;

3. Commencing or defending bankruptcy proceedings;

4. Commencing or defending winding up proceedings;

5. Negotiating with creditors or debtors to resolve the debt;

6. Voidable transaction recoveries, insolvent trading claims and enforcing liquidation rights;

7. Contesting claims by liquidators, including claims for voidable transactions or unfair preferences;

8. Contesting claims by trustees of bankrupt estates, including claims for creditor defeating dispositions or voidable transactions.

 

If you’re facing bankruptcy or corporate insolvency, don’t face it alone. Schedule a free 15-minute consultation with us today, and let’s explore how we can assist you in this challenging time.

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