What does Insolvent Trading Actually Mean? As per the Australian Corporations Act and ASIC, you are trading insolvent if you cannot meet your payment obligations when they fall due. It is at this stage that you need to take action and not incur any new debts.
It is a directors duty to understand the financial performance of their company at all times. To claim that you are unaware of the financial performance until quarterly statements are published or end of year financials are compiled is not acceptable by ASIC.
If you suspect that you are trading insolvent you are welcome to contact us. A1 Debt Assistance will help you understand your situation. Obtaining and informed view of your company’s situation is, at this stage, crucial.
Appointing A Liquidator
You may or may not need to appoint a registered liquidator. During our consultation we can establish the exact requirements. There may be options for trading out of this and /or you may be able to restructure your operations and your debts. Once you appoint a Liquidator or place your company into Voluntary Administration, the choices are no longer yours to make. You have effectively handed over control of your company to your creditors. Sometimes that is your best option, but if this does not apply to your case, it is a costly mistake that you are unable to reverse.
Company Liquidation is a last resort – make sure you have a good understanding of all your options prior to making such a decision.
Trading insolvent is a breach of your duties as a director of a company as it impacts on the financial performance and viability of your creditors, suppliers and your employees well being. We are not suggesting that you should just quit at the first sign of trouble. However, it is your responsibility to take steps to resolve the problem and either return the solvency of the business or cease trading.
To get a better understanding of the available options, contact A1 Debt Assistance for a strictly confidential phone consultation. We can help you to either restore the viability of your business or develop your most suitable exit strategy.