Debt Recovery and Insolvency
Pentana Stanton Lawyers have a team of experts who specialise in legal services related to debt recovery and insolvency.
In Australia, it is illegal under section 588G of Corporations Act to knowingly trade insolvent. A company must not continue to generate debt it knows it cannot pay. Insolvent trading can incur criminal charges, compensation proceedings and civil penalties.
Company’s directors can face civil penalties of $200,000 and when compensation proceedings are initiated by creditors, these can incur additional penalties. Because compensation charges have no limits on claims, at times, the consequences can be personal bankruptcy. And directors who face personal bankruptcy are disqualified from continuing to serve as director of the firm.
Criminal charges also can lead to disqualification of company’s directors if proven along with penalties or imprisonment.