Insolvency
Insolvency is when a company or person can't pay debts when they are due
There are several options available to an insolvent company or person:
- the most common corporate insolvency procedures for an insolvent company are liquidation, voluntary administration and receivership
- the available personal insolvency procedures for an insolvent person are bankruptcy and personal insolvency agreements.
ASIC regulates insolvent companies, it does not manage personal insolvency procedures. For more information about bankruptcy and personal insolvency agreements, visit the Australian Financial Security Authority website.
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If you are owed money by an insolvent company, you are a creditor.
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ASIC also tracks corporate insolvency trends in Australia and reports on them monthly.
The Australian Government’s insolvency reforms for small business come into effect on 1 January 2021. These reforms follow the temporary measures introduced in March 2020 in response to the COVID-19 pandemic. These measures only apply to eligible incorporated small businesses with liabilities of less than $1 million.
The reforms include a new:
- debt-restructuring process for incorporated small businesses
- simplified liquidation process for incorporated small businesses
- ‘class’ of registered liquidator
There is also an ability to extend the temporary relief.
ASIC has also begun publishing weekly statistics of companies entering external administration.
| Not sure what that insolvency term means? Our glossary can help. |