Understand and manage your company's corporate insolvency issues

Protect yourself, your company, and your creditors by acting now.

When a company’s financial position deteriorates, directors often underestimate how quickly their personal exposure grows. Under the Corporations Act 2001 (Cth), continuing to incur debts when a company is insolvent can result in civil penalties and personal liability, even where the director acted in good faith. The options for managing a company’s insolvency are time-sensitive: the earlier independent advice is sought, the broader the range of outcomes available. We work with directors, shareholders, and creditors to identify the right pathway and manage the process with precision.

What is corporate insolvency and why does it matter?

Corporate insolvency occurs when a company cannot pay its debts as and when they fall due. Once that threshold is crossed, the Corporations Act 2001 (Cth) imposes serious obligations on directors, including personal liability for debts incurred after the point of insolvency. The formal options available to an insolvent company include voluntary administration, deed of company arrangement, creditors’ voluntary winding up, and court-ordered liquidation. Each carries different consequences for directors, creditors, and any future business activities, and choosing the right one requires timely, independent advice.

When is a company legally insolvent?

A company is insolvent when it cannot pay its debts as and when they fall due. The test under the Corporations Act 2001 (Cth) is a cash flow test. It is not enough for the company to have assets exceeding liabilities if those assets cannot be quickly converted to meet current obligations. Directors should seek legal advice as soon as there is any doubt about the company’s ability to pay its debts.

What personal liability do directors face when a company becomes insolvent?

Under the Corporations Act 2001 (Cth), a director who allows a company to incur debts after the point of insolvency may be personally liable to compensate creditors for those debts. This liability attaches from the point the director knew, or ought reasonably to have suspected, that the company was insolvent. Acting promptly and seeking independent advice early are the most effective ways to manage this exposure.

What is the difference between voluntary administration and liquidation?

Voluntary administration is a process designed to give a company breathing space to consider its options and potentially propose a deed of company arrangement, allowing it to continue trading or achieve a better outcome than liquidation. Liquidation involves winding up the company’s affairs, realising assets, and distributing proceeds to creditors before the company is deregistered. The right choice depends on whether the business has a viable future and the specific financial circumstances.

How long does a corporate insolvency process take?

The timeframe varies significantly depending on the complexity of the matter and the pathway chosen. A straightforward creditors’ voluntary liquidation may conclude in months. A court-ordered winding up of a complex company can take years, particularly where there are contested preference claims or director litigation. Your lawyer can give you a realistic estimate once the specific circumstances are understood.

Understand your position.

Protect your personal liability.

Choose the right pathway.

Get clear on where you stand before the position changes.

Corporate insolvency situations move quickly, and options narrow as time passes. A clear assessment now is the most valuable thing you can do. It may be the difference between an orderly outcome and a disorderly one.

Insolvency without a plan destroys value for everyone.

You can see the company is in serious financial difficulty, but you are not sure whether you have already crossed the line into insolvency, or what that means for your personal position. The uncertainty is paralysing: acting too late exposes you to insolvent trading liability, but acting too early may destroy value that could otherwise be preserved.

We will assess the company's solvency position against the legal test and advise you on your current exposure.
We will identify the most appropriate insolvency pathway.
We will advise directors on their duties and assist them to take steps to limit personal liability.
We will liaise with insolvency practitioners and ensure the formal process is managed efficiently.
We will advise creditors on their rights and options throughout the insolvency process.

You are watching the company's cash position deteriorate and you need answers fast.

You are a director of a company that has been losing ground for months. A major customer has not paid, your trade creditors are pushing hard, and the bank is raising questions about the facility. You have always believed the business was viable, but the numbers are telling a different story. You need to know whether you are already personally exposed, what the options are, and whether there is any way to preserve the business or its value before things get worse.

What's included in your corporate insolvency advice service

Solvency assessment and director exposure review.
Advice on voluntary administration and deed of company arrangement options.
Director duty and insolvent trading analysis.
Creditors' rights assessment and strategic advice.
Liaison with insolvency practitioners throughout the process.

What happens when you wait too long.

Directors who delay seeking advice in a corporate insolvency situation routinely face outcomes that could have been avoided. Under the Corporations Act 2001 (Cth), insolvent trading liability attaches personally and accrues from the moment the director ought to have suspected insolvency, not from the moment they were actually told. Creditors who act slowly lose their preferential position as others move first. Companies that enter formal insolvency without any restructuring groundwork rarely preserve value for anyone. Every week without a clear strategy is a week that narrows the options and deepens the exposure.

Here is how we put you back in control.

We start by establishing the facts: a clear-eyed solvency assessment that tells you exactly where the company stands and when liability for further debts would attach. From there, we map out the available pathways and their consequences in practical terms, including what actually happens to directors, creditors, and any ongoing business operations. If a formal appointment is needed, we help you engage the right practitioner and ensure the process is managed efficiently. If restructuring is possible, we work with you to build a case for a deed of company arrangement that gives the business a genuine second chance.

How we help you manage it.

Three steps to a clear path forward.

Assess your position.

We review the company's financial records and advise on solvency, director exposure, and the options available, giving you a clear picture before any formal process begins.

Select the pathway.

We advise on the pros and cons of each available insolvency mechanism and help you engage the right insolvency practitioner if an appointment is required.

Manage the process.

We support you through the formal insolvency process as director, creditor, or practitioner, and ensure your rights and obligations are properly discharged.

Experienced insolvency lawyers ready to advise you.

We know how disorienting it is to watch a business you have built struggle under financial pressure while carrying the weight of personal liability risk. Our lawyers have advised directors, creditors, and insolvency practitioners across a wide range of corporate insolvency matters, from early-stage solvency assessments through to complex liquidations and contested preference recoveries. We understand the Act’s requirements and the practical consequences of each pathway, and we will tell you plainly what your options are and what the risks look like from here.

We understand you want to know the cost, before we get started.

We will map out our process, from beginning to end, so you know what the journey will look like before you get started.

We will provide you with a clear and detailed Work Proposal covering each step along the way.

Our fair fees are all-inclusive. No hidden costs for telephone calls, emails, photocopying, couriers, or coffee.

Our great lawyer guarantee

We want to be part of your team over the long term. We achieve this by adhering to these core principles:

Take the time

We listen carefully to understand what you want to achieve. Then we thoroughly explain our advice and step you through the documents. You can be sure you know the full consequences.

Share our knowledge

We will pass on as much knowledge as we can, so you can make your own informed decisions. We want to make you truly independent.

Stick to our knitting

We only do what we're good at. You can be confident that we know what we're doing and don't pass on the cost of our learning.

Work as one team

Someone will always be available to answer your questions, or point you in the right direction. You will also benefit from a range of perspectives and experience.

Fair pricing

For advice and documents, we provide a fixed or capped quote so you don't take price risk. If you're in a dispute, we map out the process and costs so you know what to expect.

It's your show

We're not in this for our egos. We're in it for a front row seat to witness your success.

Act now to protect your position.

When a company’s financial position deteriorates, directors often underestimate how quickly their personal exposure grows. Under the Corporations Act 2001 (Cth), continuing to incur debts when a company is insolvent can result in civil penalties and personal liability, even where the director acted in good faith. The options for managing a company’s insolvency are time-sensitive: the earlier independent advice is sought, the broader the range of outcomes available. We work with directors, shareholders, and creditors to identify the right pathway and manage the process with precision.

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