A member asked over 7 years ago

Bankruptcy

Once a company is insolvent does it get wound up or can it start a fresh?

Dane Grauf
Director at Grauf O'Brien Lawyers

Hi there,

In Australia, when a company becomes insolvent, it is generally placed into liquidation (as opposed to bankruptcy, which applies to individuals). Upon the completion of the liquidation, which can take years as there is no statutory timeframe, the company is deregistered with ASIC. It cannot start fresh after liquidation. With that said, an alternative to liquidation is to appoint voluntary administrators. The function of this form of insolvency appointment is to enable the directors (or anyone for that matter) to present a deed of company arrangement (DOCA). This is effectively a formal arrangement with creditors to pay them a percentage of their debts in exchange for the return of the company.


Suggested way forward

Before appointing a liquidator, you should seek advice as to which form of insolvency appointment best suits the situation. You may be able to salvage the business of the company if you believe that it is worth doing so.

Answered about 6 years ago   Legal disclaimer

Thank

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