The prohibition against insolvent trading is a duty of all company directors to prevent their company from trading (i.e. incurring debts) while insolvent. It is illegal for a director of a company to allow an insolvent company to continue to trade, while having reasonable grounds for suspecting insolvency. The consequences can be serious: read our guide to find out more.
A trading trust is a trust over goodwill and business assets with the trustee being the legal person responsible to creditors. A trading trust is usually a discretionary trust whose trustee is a company, that is used to trade for the benefit of the beneficiaries. As with a non-trading trust, a trading trust separates legal ownership of assets from beneficial ownership and control. The controllers of the business are the owners and their family who exercise a controlling mind through their appointment as directors of the trustee company.
The Government is using its currently massive political capital to push through a revolution in SME insolvency law in Australia. Their aim is to make the insolvency process less draconian for small businesses and, in the long term, encourage a more entrepreneurial culture. The changes foreshadow streamlined and genuine debt forgiveness outside of voluntary administration.
In recent years, there has been a real ‘gold rush’ for cryptocurrency. And while cryptocurrency needs to be ‘mined’, just like the real stuff, it is much easier to transport and, potentially, keep secure.
Pre-insolvency advisers are professionals who help business owners to conduct a root cause analysis to understand why their business is failing and then help them to develop a turnaround strategy (i.e. what to do next) or if this is not possible, plan an orderly winding up.
Illegal phoenix activity — the ‘re-birth’ of a business in new corporate feathers to avoid its obligations — has been a major concern of regulators in Australia for the last 25 years. In this ultimate guide we explain everything you ever wanted (and didn’t want) to know about phoenix activity in Australia.
Offshore tax havens are the jurisdictions of choice for building corporate structures to protect assets from creditors and hide the identity of ultimate beneficiaries. This article should be of interest to any professional advisor interested in understanding the nuts and bolts of setting up an offshore corporate structure.
Voluntary administration is a process where a registered insolvency professional temporarily takes control of a business which is insolvent, or in financial difficulty. This professional, the ‘voluntary administrator’, takes away control from the directors, for a period of time, in order to assess the finances and determine the future of the business.
It is illegal for a director of a company to allow an insolvent company to continue to trade, while having reasonable grounds for suspecting insolvency. The consequences can be serious.
Voluntary administration rarely results in a good outcome for the business – or its creditors. The end result is usually the winding up of the business as a going concern, and ‘next-to-nada’ for the creditors.
In article: The COVID-19 economic meltdown has already led to some quick changes to Australian bankruptcy and insolvency law. However, as the basic tools for dealing with insolvency remain the same, it is worth looking at the general regulatory landscape…
Business owners need to be realistic about the collectability of invoices and be ruthless with cutting expenses to deal with a potential economic depression. They also need to look to the future and pivot their business strategy because the world has changed.