Where to get help
ARITA does not offer specific advice to companies or individuals in
financial difficulty.
We can also help you to find out if an insolvency practitioner is an ARITA member with our member look-up . Most ARITA members provide an initial meeting to discuss your circumstances, free of charge.
An insolvency practitioner can conduct a solvency review of your company
and explain available options such as refinancing, restructuring or
changing your company’s activities, or appointing an external
administrator.
For companies
We provide
information for directors where their company is facing financial difficulties.
ASIC (Australian Securities and Investments Commission) provides a range of useful information on its website on
director's duties,
financial difficulty and insolvency and
insolvent trading.
ARITA and ASIC also provide a range of
information sheets for stakeholders affected by insolvency of companies.
Internal company disputes
Action can’t usually be taken over purely internal company disputes
(such as disputes about the interpretation of a company's constitution)
or financial disputes. ASIC will not normally handle these complaints
unless someone has breached the Corporations Law. ARITA does not have any jurisdiction over this issue.
You should seek independent legal advice.
For individuals or sole traders
If you are in financial difficulty, ARITA provides information on bankruptcy and alternatives.
AFSA (Australia Financial Security Authority) provides a range of useful information.
ARITA and AFSA also provide a range of information sheets for stakeholders affected by insolvency of individuals.
Owed, or lost money
If you are owed money by a company that has gone into insolvency or an individual who has gone bankrupt , your claim against the company/individual becomes a right to claim in their insolvency.
Whether you will receive a dividend from the insolvency depends on a range of factors including:
-
assets that were on hand when the insolvency practitioner was appointed
- recoveries that the insolvency practitioner was able to make, and
- the cost of the insolvency.
If you have lost money because of an insolvency, this does not mean
that an insolvency practitioner has behaved unethically. The reason an
insolvency professional was called in is because of a shortfall in funds
that occurred prior to their appointment. Insolvency practitioners are
consulted when a company or person is having problems paying their
bills.
The responsibility of the independent insolvency professional is to
recover any available assets, conduct an investigation into the reasons
for the failure, report to ASIC and creditors and distribute any
available money to creditors in the order set out under the law.
Employees are given priority for money owed to them.
Many companies appoint an insolvency practitioner when they have very
few assets available. In 2015/2016, insolvency practitioners lodged
9,465 reports with ASIC. In 7,582 (80%) of those reports, the insolvency
practitioner reported that there were less than $50,000 of assets. In
3,852 of those reports (40%), the insolvency practitioner reported that
there were less than $1 of assets.
If there are no assets available in the insolvency administration, the
insolvency practitioner will not be able to pay creditors. The
insolvency practitioner may also not have enough money to meet the cost
of ongoing detailed investigations or legal actions.
In all liquidations (from 1 September 2017) and voluntary
administrations, the insolvency practitioner will report to creditors.
These reports will advise you of what has happened in the insolvency.
Insolvency practice is a complicated area, and it's particularly
difficult because the circumstances involved in a business crisis
usually mean a very stressful period for everyone involved.
If you don't understand what is happening in an insolvency, please refer to the information on our website or speak to the insolvency practitioner or a member of their staff.
Coping with the emotional impact of financial distress
beyondblue
beyondblue offers some useful resources for people struggling with the emotional impact of financial distress.
Their free 28-page booklet, Taking care of yourself after retrenchment or financial loss, contains some helpful advice.
The beyondblue Support Service provides confidential, one-on-one counselling with a trained mental health professional.
Phone: 1300 22 4636
Lifeline
Lifeline offers phone crisis counselling for people who are experiencing financial and emotional hardship.
Phone: 13 11 14 Australia-wide
Online crisis support chat (7 pm to 4 am daily.)