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Restructuring and insolvency law addresses the financial distress experienced by individuals and businesses. In Auburn, a diverse suburb in New South Wales, these laws help manage scenarios when debts cannot be paid as they become due. The goal is to either facilitate the rescue and reorganisation of a struggling business, or to ensure an equitable distribution of assets among creditors if closure or bankruptcy is unavoidable. Australian law, applied locally, sets out the framework for voluntary administration, liquidation, bankruptcy, restructuring, and voluntary arrangements.
Seeking a lawyer experienced in restructuring and insolvency can be crucial in the following common situations:
Lawyers versed in this field not only help with legal filings and complex paperwork but also with negotiations and risk management to help reach the most favorable outcomes.
In Auburn, as in the rest of Australia, insolvency and restructuring are regulated by federal laws under the Corporations Act 2001 (Cth) for companies and the Bankruptcy Act 1966 (Cth) for individuals. Some key local law aspects to consider include:
The laws are enforced locally by administrators, liquidators, and trustees registered with the Australian Securities and Investments Commission (ASIC) and the Australian Financial Security Authority (AFSA).
Restructuring involves reorganising a business’s finances or operations to improve its viability and avoid insolvency. Insolvency is when a business or individual cannot pay debts as they fall due.
It offers breathing space from creditors, allowing for a proposal to restructure or pay debts in a way that may keep the business alive or deliver better outcomes for creditors than immediate liquidation.
As soon as you notice difficulty in meeting financial obligations consistently, or if creditors are threatening legal action. Early intervention can broaden your available options.
Generally, directors are not liable for company debts unless they have provided personal guarantees or breached their duties, such as by trading while insolvent.
Your assets may be sold to pay creditors, and you will face restrictions on obtaining credit, traveling overseas, and managing a business under the Bankruptcy Act 1966.
Bankruptcy typically lasts for three years from the date a Statement of Affairs is filed, though some conditions or extended bankruptcies can apply.
A DOCA is a binding agreement between a company and its creditors that outlines how the company's affairs, assets, and liabilities will be handled, often as an alternative to liquidation.
Yes, creditors can apply to the court to wind up a company or make an individual bankrupt if certain conditions are met, such as the existence of unpaid debts over prescribed thresholds.
Most unsecured debts are covered, but some debts are excluded, including court-imposed fines, child support, and HELP/HECS debts. You should seek advice on your specific circumstances.
Restructuring may offer creditors better returns compared to insolvency proceedings by providing a structured way to recover debt as the distressed business regains viability.
For more guidance or support, consider consulting these resources and agencies:
If you suspect you might be facing financial distress personally or as a business owner in Auburn, act swiftly. Delays often reduce available options and can increase liabilities or personal risk. Consult a restructuring or insolvency lawyer to:
Contact a qualified, local legal practitioner with experience in restructuring and insolvency to ensure you get informed, practical advice tailored to your situation. Early action is often the key to a better outcome.
