Bankruptcy & Insolvency matters:

Bankruptcy is where a person is not able to pay their debts when they fall due. A person can voluntarily declare themselves bankrupt or, in the alternative, a creditor to whom they owe money, may initiate this process. The first step for the creditor is to issue a Bankruptcy Notice under which the debtor will have 21 days to pay the amount outstanding, or otherwise enter into a mutually acceptable payment arrangement. If the debtor does not comply with the Bankruptcy Notice and the debt remains unpaid, the debtor is deemed to have committed an act of bankruptcy and the creditor is able to bring legal proceedings seeking that a sequestration order (ie bankruptcy order) be made against the debtor. 

 Insolvency is where a company is unable to pay their debts when they fall due. A company may be voluntarily wound up if they are insolvent, or a creditor may commence this process in an effort to recover the amount owed. The first step for the creditor is to issue a statutory demand against the company. This demand will require payment of the debt within 21 days, failing which the company is deemed to be insolvent and the creditor can bring legal proceedings seeking an order for the wind up of the company.

Generally during the course of bankruptcy and insolvency matters, the parties engage in very few alternative dispute resolution ("ADR") processes. The main ADR mechanism that is utilised is negotiation. This involves the parties submitting offers of settlement in an effort to finalise the matter as early as possible, and usually prior to the Court making orders for the bankruptcy or winding up of the debtor. Negotiations will usually focus on the quantum of debt owed, whether any additional costs are payable by the debtor (eg interest, legal costs or other default fees owed under the relevant contract), the date for payment or payments (where an instalment arrangement is agreed), and what shall occur in the event there is a default in payment.

Should you require any assistance or advice as a debtor in defending bankruptcy/ insolvency action, or, if you are a creditor wishing to pursue such options, do not hesitate to contact our Bankruptcy and Insolvency Lawyers by telephone on (02) 9233 4048 or send an email to info@navado.com.au.    

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.