Corporate and Personal Insolvencies Links What is a Court by rrboy


									Corporate and Personal Insolvencies                             Links

What is a Court Liquidation?
On an application made by a creditor, director or some other
interested party, to either the Supreme or Federal Court, an
Official Liquidator can be placed in charge of a company and
its assets and business for the purpose of winding it up. The
Official Liquidator realises the company’s assets and
distributes the monies collected amongst creditors and if
appropriate, shareholders.

The process from time of application to appointment of
Liquidator is usually around four weeks.

What is a Provisional Liquidation?                              System

On an application made by a creditor, director or some other
interested party, to either the Supreme or Federal Court, an
Official Liquidator can be placed in charge of a company and
its assets and business for the purpose of maintaining and
protecting the assets until the Court formally considers any
winding up application.

Such an order is generally made by the Court in
circumstances where there is a real or perceived concern
that either:

        assets of the company may be lost, removed or
        otherwise dissipated, or

        the company’s business may be adversely affected
        by some pending event or the value of the business
        in some way reduced without the control and
        protection of the Provisional Liquidator.

What is a Members Voluntary Liquidation?                        System

A company which is solvent, but has come to the end of its
useful purpose, is liquidated by shareholder resolution which
results in the appointment of a Liquidator and the ultimate
realisation and distribution of company assets.

No particular licence is required to act as a Liquidator in
these circumstances.

The link attached here provides, free of charge, the forms
and checklist for you to undertake such a Liquidation.
What is a Receivership?                                          System

A secured creditor (ie one with either a fixed and or floating
charge) can appoint an Official or Registered Liquidator to
take control of assets subject to the charge and to realise
them for the secured creditor’s benefit; but regard must be
had to the Receiver’s obligations to other creditors, the
company and its members.

The Receiver is commonly appointed as a Receiver and
Manager so as to enable business activity to continue.

When the Receiver has collected all available monies subject
to the charge, the remaining assets (if any) and company are
returned to the control of the directors – but quite commonly,
in the interim, a Liquidator will have been appointed and
control will then be handed to the Liquidator.

What is a Voluntary Administration?                              System

A company which is insolvent or is likely to become insolvent
at some future date can obtain protection from creditor action
by the appointment of a Registered Liquidator to act as
Administrator of it.

The Administrator, while taking control of the company and
where appropriate continuing its operation, must investigate
the company’s affairs and provide a report to creditors
making a recommendation as to its future.

At a meeting of creditors, usually called 28 days after the
Administrator’s appointment, creditors will vote to decide
whether to accept or reject any proposal that may be put
forward as to how the company’s affairs are dealt with into
the future.

The Administrator is usually appointed by the Directors but
can also be appointed by a Secured Creditor with a charge
over all or a substantial portion of the company’s assets.
What is a Bankruptcy?                                                System

This applies to individuals who are insolvent.

An individual can declare himself bankrupt; or alternatively a
creditor can make application to the Federal Court for an
order declaring an individual bankrupt (a sequestration

Although some assets are protected from bankruptcy (eg
necessary household furniture and effects, some tools of
trade and a restricted interest in a motor vehicle) all other
assets are passed to the Bankruptcy Trustee for realisation
and distribution amongst creditors. Income earned by a
bankrupt during the bankruptcy period (usually 3 years) is
shared with creditors once it exceeds threshold levels.

A Bankruptcy Trustee has wide powers of investigation and
the ability to recover assets disposed of prior to bankruptcy in
circumstances where, for example, normal commerciality has
been disregarded.

What is a Part IX Debt Agreement?                                    System

Where a person has limited debts, limited assets and limited
income a bargain can be reached with creditors to pay debts
in part (as full satisfaction of monies owed) or in full but over,
say, an extended period. The bargaining process is
regulated and is conducted through a postal ballot under the
supervision and control of the government agency,
Insolvency and Trustee Service Australia.

The process is designed to be relatively quick and

What is a Part X Arrangement and Composition                         System
with Creditors?

To avoid bankruptcy, a debtor can appoint a controlling
trustee to take charge of his assets, conduct an investigation
and through a formal meeting process put a proposal to
creditors as to how debts will be paid – either in part or in full
without the necessity of bankruptcy.

The bargain able to be reached with creditors is very flexible
and commonly involves monies being available to creditors
(eg from a third party), which they would otherwise not have
access to.

A Part IX or X is for an individual, the equivalent of a
Voluntary Administration for a company.
What is a Section 73 Composition Bankruptcy Act                   System

After bankruptcy, a bankrupt may put a proposal to creditors to
make funds available for their benefit which they otherwise
would not receive (eg monies from a third party).

If the proposal is accepted the bankruptcy is annulled.

For further information, contact SV Partners directly to
discuss the specific details of your client’s individual
situation. The links above also give more detailed
information about matters generally.

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