The case of ASIC v Plymin is significant for lawyers because it sets out a list of indicators that can help us understand when a company will be found to be insolvent. The general rule in law is that company insolvency is proven by a cash-flow test not a balance sheet test.
Whenever a business considers lending money or selling goods it should consider whether it might be worthwhile to protect that lending with a personal property security, such as a PMSI. This will place the business in a much better position if the debtor goes bust. However, if you are creditor (or former creditor) and end up receiving a demand from a liquidator relating to an unfair preference, don’t despair.