Director Personal Liability for company debts – top 5 ways to get stung

A common question we are asked is whether a director is personally liable for a company’s debts. The easy answer is “no”.  But there are a number of ways a director can be made personally liable.  The ones that get the most coverage are insolvent trading and director penalty notices but there are other more common ways. Click Here To Read More

Insolvent Trading – another ASIC court action

I know from the many calls we take at Dissolve that most directors are aware of, and worried about, insolvent trading laws.  There was an interesting case I blogged about last year here and another much bigger case has been commenced by ASIC this month. Click Here To Read More

Insolvency and Restructuring Solutions – Handy Tools for Self Diagnosis

Sometimes, well… nearly always, directors don’t like to talk about their company’s problems.  So we have developed two handy tools on our website where directors can do a bit of self diagnosis:

Tool 1 – Is my Company Insolvent? has nine tick-a-box questions on the topics of Cash Flow, Financial Statements and Creditor Relationships.  I strongly recommend any director, or adviser, pondering the solvency of a company use the list.  It’ll take about 1 minute and is done on a “best guess” basis.  The case law on this topic is huge, confusing and very much open to opinion.  So, believe it or not, I spent about a week distilling the contents of the many legal cases on the topic and in the end concluded it aint that hard – hence the tick-a-boxes. 
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Insolvent Trading – Go to Jail – Do Not Pass Go – Do Not Collect $873,997

It can happen – recently a director was sentenced to 12 months prison for Insolvent Trading.  A director, Ms Kuaye, received that sentence for Trading While Insolvent and incurring debts of $112,000.  It was part of an overall sentence of three years – she also misappropriated $873,997.  There are a few extra facts that put the sentence into context and suggest she might have gotten off lightly.  Click Here To Read More

The typical company insolvency – size, sector, creditors, offences and outcomes

Let me dramatically overgeneralise. If your company went into liquidation in the year to June 2011 then, most likely, it will have been in the construction game, had fewer than 5 employees, assets of less than $10,000, you will have committed an offence by trading while insolvent, will owe creditors less than $250,000, including the tax man, your liquidator will pay no dividend to unsecured creditors and ASIC will not pursue you for the offences you committed.  Well, actually that’s a description of the most common statistical categories for companies entering liquidation. Click Here To Read More

Insolvent Trading Laws – broken, yes, but changes shelved

In 2010, it was announced that the Government would review Australia’s insolvent trading laws, which are amongst the toughest in the world.  In brief, the law currently says that if a company is insolvent and the directors allow the company to incur new debts, then the directors can be personally liable for those new debts.  It was recently announced that the proposed changes, which would have put Australia on a similar footing to other countries, have been shelved.

Let me make my view clear – Australia’s insolvent trading laws are completely flawed.  Let me explain. Click Here To Read More