INSOLVENCY LITIGATION
We are relied on by directors to defend against insolvency proceedings, breach of director duties, insolvent trading claims & more. We know how liquidators work, and what they are looking for.
We’ve acted in public examinations and defended against unfair preferences and insolvent trading claims. We are experienced, and have valuable insights that make all the difference.
Director’s duties, Insolvent Trading, Public Examinations & Recovery Actions More
At Insolvit, we take pride in our role as a leading Melbourne-based law firm, dedicated to representing clients across Australia. Our experienced team provides strategic advice on insolvency matters, catering to insolvency practitioners, directors, creditors (both secured and unsecured), and small to medium corporations.
Our Areas of Expertise
1. Insolvency Advisory Services
Liquidators and Voluntary Administrators: We act on behalf of liquidators and voluntary administrators, ensuring compliance with legal requirements and efficient administration.
Restructuring Options: When businesses face financial challenges, we guide them through various restructuring options, including voluntary administration and other alternatives.
Creditors’ Rights: We advocate for creditors’ rights, addressing issues related to unfair preference claims, uncommercial transactions, and more.
2. Formal Insolvency Administration
Insolvent Trading Claims: Our team advises on the complexities of insolvent trading claims, helping directors navigate legal challenges.
Investigatory Process: We assist with investigations related to insolvency administrations, ensuring due diligence and compliance.
Personal Property Securities Register (PPSR): We provide insights into PPSR matters, safeguarding clients’ interests.
3. Regulatory Compliance and Court Actions
ASIC and Regulatory Examinations: We are experience dealing with ASIC and investigatory examinations. Our team assists with regulatory examinations under the Corporations Act 2001, ASIC Act 2001, and the Bankruptcy Act 1966.
Court Representation: We represent clients in court actions related to insolvency, protecting their rights and interests
Navigating Unfair Preference Claims: Insolvit Legal Insights
Understanding Unfair Preferences
When a company makes payments to a creditor shortly before entering liquidation, the creditor may receive what is known as an unfair preference. In such cases, a liquidator has the authority to recover these preferences from the creditor. The existence of an unfair preference claim depends on several factors, including the timing, nature of the payment, and the creditor’s security position.
Scenario Example
Suppose a payment is made to a creditor just before the winding-up process begins. In this scenario, the liquidator investigates whether the creditor gained an advantage at the expense of other creditors or shareholders. Key considerations include whether the creditor was aware of the company’s insolvency and whether the payment exceeded what the creditor would have received after the company’s winding-up.
Defending Against Unfair Preferences
Unfair preference claims can be defended or resolved commercially with the right legal guidance. An experienced insolvency lawyer will explore defenses to unfair preferences, allowing directors and creditors to navigate interactions with the liquidator effectively.
Additional Recovery Actions
Beyond unfair preferences, a liquidator’s primary role involves identifying, gathering, and disposing of a company’s assets for the benefit of creditors. To maximize creditor benefits, liquidators explore various recovery actions, including:
Voidable Transactions: Liquidators assess the validity of transactions and determine whether any are voidable. Voidable transactions can be reversed to expand the pool of available assets for creditors.
Uncommercial Transactions: An uncommercial transaction occurs when a reasonable person would not have made it under the company’s circumstances. If the company was insolvent at the time of the transaction, it may be declared void, and the liquidator can recover any benefit obtained.
Illustrative Example
Consider a business asset sale below market value. Such a transaction could be deemed uncommercial. Liquidators have broad powers to scrutinize various transactions, including those involving associated third parties (such as “phoenix” arrangements).
Liquidator’s Examinations
Liquidators can seek court approval to conduct public examinations of company directors, officers, and others involved in managing the company’s affairs. During these examinations, the liquidator publicly questions individuals about the company’s business, property, and overall situation.
Purpose of Public Examinations
The primary goal is to assist the liquidator in investigating potential legal claims and identifying recoverable assets. An insolvency legal expert plays a crucial role in guiding directors and officers through the examination process, addressing document production, legal privilege issues, and protecting them from penalties.
At Insolvit, we specialize in turning financial turmoil into a roadmap for recovery. As a leading law firm based in Melbourne, we offer expert legal assistance in personal bankruptcy, corporate insolvency, and insolvency litigation. Our experienced team is committed to delivering strategic solutions that protect your interests and guide you toward a stable financial future. Get advice early to explore your options—we’re here to help.
With Insolvit, you can navigate the complexities of bankruptcy and insolvency with confidence, knowing you have a partner dedicated to your best interests