Corporate Insolvency and Personal Bankruptcy

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Bankruptcy is the legal process in which an individual is declared unable to pay their debts and most current and after acquired property vests in an appointed Bankruptcy Trustee. Typically a bankruptcy will last for 3 years and 1 day, and will release you from most debts, granting you relief and permitting a fresh start. The consequences of Bankruptcy are serious and early advice is critical to controlling some of the processes variables.

Under the Corporations Act 2001 (Cth), Company directors that fail to prevent a company from incurring debts when it is insolvent may be held personally liable to compensate creditors for unpaid debts incurred from when the Company became technically insolvent. When determined in retrospect, allegations of Insolvent Trading can threaten personal solvency. 

Payments or asset transfers made by an individual or company shortly before bankruptcy or liquidation may be subject to a claw back from liquidators and trustees in order to ensure a fair distribution of assets among creditors. We assist Insolvency Practitioners in recovery of voidable transactions and respondents in raising defences to claims.

Breaches of directors duties occur when a company director fails to act in accordance with legal and fiduciary responsibilities goverened by the Corporations Act 2001 (Cth) and the Common Law. Breaches can result in personal liability, civil penalty and potentially criminal charges. 

Director Penalty Notices, or DPN's are formal notices issued by the ATO that make company directors personally liable for certain unpaid business tax debts. Strict timelimits apply, defences are limited and early intervention and guidance is critical to a positive outcome if you have been issued with a DPN. The ATO has massively increased the number of enforced recoveries of DPN debts over the past few years.

Veiled ownership structures are often used by parties to obscure and insulate ultimate beneficial owners. Methods commonly implemented utilise foreign entities, shell companies, trusts or nominee shareholders and directors. Bounty Law will work through these complex problems to trace, prove and recover funds for creditors.  

Public Examinations are a powerful tool available to Liquidators and Bankruptcy Trustees to investigate, obtain information and establish facts about a company or individuals financial affairs, history and management. Upon considering the scope of a Public Examination, almost any person with knowledge of these matters can be summonsed to Court to answer questions.  

Company restructuring and administration are formal processes used to externally manage an insolvency event and to re-organise affairs to avoid a liquidation. Voluntary Administrations (VA) and Small Business Restructures (SBR) offer structured pathways that protect directors and permit companies an oppurtunity to negotiate with creditors while preserving business viability.

The strictures of the Corporations Act 2001 (Cth) and the Bankruptcy Act 1966 (Cth) are complex and regularly and tested in Australian Courts. The Bounty Law team regularly manage special situations, including applications for International Summonses, freezing and search orders, bench arrest warrants and various special leave applications to the Court for orders on behalf of Insolvency Professionals.