Prime Lawyers - Insolvency and Bankruptcy

Insolvency and Bankruptcy
Prime Lawyers has an extensive insolvency and liquidation team. We can assist both creditors and debtors with advice and legal representation in all aspects of insolvency.

What is insolvency?

Insolvency is a general term used for proceedings designed to bring the financial affairs of a debtor (whether an individual or company) under the control of an external administrator whose function is to secure repayment of debts and by the debtor to all creditors to the extent that the debtor has the funds to cover those debts. If the debtor does not have enough funds to repay all debts than the administrator must distribute whatever funds and assets the debtor amongst all creditors ion accordance with pre determined rules.

Types of Insolvency

There are two types of insolvency:

1. Corporate insolvency – Better known as company liquidation; and

2. Personal Insolvency – better known as bankruptcy.

Advantages of Insolvency include:

1. Finalises all debts once and for all.

2. Because of the serious consequences of insolvency, debtors often pay off their debt to avoid being liquidated or declared bankrupt.

3. Allows an external administrator to investigate the debtor affairs to find out whether the debt has deliberately got rid off assets to avoid paying off debts, If so, in some circumstances the administrator can “claw back” some of those assets for the benefit of creditors.

Disadvantage of Insolvency include:

1.The creditor who initiates the insolvency has no special priority over other creditors to get their debt paid. Therefore if the debtor has insufficient funds to meet all their debts, the creditor might not get all (or any) of their debt paid back even though they initiated the insolvency.

Contact us now to arrange your initial consultation to discuss the logistics of your matter as well as the estimated costs and time it will take to complete the matter.