Liquidators and Insolvency Practitioners Melbourne

An insolvency practitioner helps companies and individuals assess financial difficulties, understand their obligations and explore the available options. They also work with accountants, lawyers and other advisers to understand the circumstances and explain the practical implications of each option.

For companies, this may include restructuring the business, small business restructuring, voluntary administration or liquidation. For individuals, it may involve bankruptcy or other personal insolvency options.

When formally appointed, an insolvency practitioner acts independently and carries out the responsibilities of that appointment. Depending on the process, this may include overseeing a restructuring proposal, investigating financial affairs, realising assets and reporting to creditors.

The cost of liquidation depends on the nature and complexity of the company’s affairs. Factors include its assets and liabilities, the condition of its financial records, and the work required to investigate transactions, recover funds and report to creditors.

Fees and expenses are generally paid from available company assets and recoveries. Where funds are insufficient, other funding arrangements may need to be considered.

Before a voluntary appointment, the proposed liquidator can assess the circumstances, explain the likely fees and expenses, and discuss how they would be funded.

Insolvency means being unable to pay debts as and when they fall due. It describes a financial position that can affect both companies and individuals.

Bankruptcy is a formal legal process for individuals, including sole traders, who cannot pay their debts. A bankruptcy trustee investigates their financial affairs, deals with assets available to creditors and distributes available funds. Bankruptcy can provide relief from many debts, but also has consequences for assets, income and access to credit.

Companies cannot become bankrupt. Depending on their circumstances and eligibility, they may enter small business restructuring, voluntary administration or liquidation.

A company is insolvent if it cannot pay its debts as and when they fall due. Common warning signs include persistent cash flow shortages, overdue tax or superannuation, unpaid suppliers and difficulty meeting wages or loan repayments.

A temporary cash flow shortage does not necessarily mean a company is insolvent, but recurring payment difficulties warrant a closer assessment. Having assets worth more than the company owes does not, by itself, establish solvency—the company must be able to access funds to meet its debts when due.

An insolvency practitioner can review the company’s cash flow, liabilities and available resources to assess its position and explain the options and directors’ responsibilities.

Worrells helps directors, individuals and their advisers make sense of financial difficulties and understand the next steps. You don’t need to know which process you need before starting a conversation.