Legal news
In certain circumstances creditors can take direct action against directors of companies in liquidation to recover insolvent trading losses suffered.
The process for doing so is to first try and obtain the liquidator’s consent and if they are not forthcoming, then take the steps required under subsections 588S and 588T of the Act.
The most common basis upon which creditors make an application to wind up a company and appoint liquidators is upon the non-compliance with a Creditor’s Statutory Demand. If the debtor company ignores the Creditor’s Statutory Demand and no payment or compromise is reached then the company is presumed insolvent, paving the way to wind up the company.
This article contains an explanation of the steps required when lodging an application for winding up in these circumstances, as well as some helpful tips to navigate the process effectively.
