Bankruptcy & Insolvency Lawyers in Queensland

Bankruptcy and Insolvency Law in Queensland

Bankruptcy and insolvency laws help individuals and businesses deal with overwhelming debt. Governed by federal legislation including the Bankruptcy Act 1966 and Corporations Act 2001, these processes provide structured solutions for financial distress. Queensland insolvency lawyers advise on bankruptcy alternatives, navigate insolvency proceedings, and protect creditors' rights.

Personal Bankruptcy

Bankruptcy is a legal process where an individual is declared unable to pay their debts. It can be voluntary (debtor's petition) or involuntary (creditor's petition). Bankruptcy typically lasts three years, though it can extend to eight years in some circumstances. A trustee takes control of the bankrupt's assets (except protected items), sells non-exempt property, and distributes proceeds to creditors. Bankruptcy provides relief from debt recovery action and harassment, but has serious consequences including travel restrictions, asset loss, and credit history impacts.

Alternatives to Bankruptcy

Before considering bankruptcy, explore alternatives including debt agreements (Part IX), personal insolvency agreements (Part X), and informal arrangements with creditors. Debt agreements allow you to pay a proportion of debts over time, avoiding bankruptcy's consequences. Personal insolvency agreements are more flexible, negotiated with creditors. Both require a registered trustee. Queensland financial counsellors and insolvency lawyers assess which option suits your circumstances.

Corporate Insolvency

Companies facing financial difficulty have several insolvency options. Voluntary administration allows an independent administrator to investigate the company's affairs and recommend to creditors whether to wind up, execute a deed of company arrangement, or return to directors' control. Liquidation (winding up) involves appointing a liquidator to realize assets and distribute to creditors. Receivership occurs when secured creditors appoint receivers to take control of charged assets. Each process has different purposes and outcomes.

Liquidation

Liquidation ends a company's existence. It can be voluntary (members' or creditors') or court-ordered. The liquidator investigates the company's affairs, recovers assets, sells property, examines director conduct, and distributes proceeds according to statutory priorities. Employees have priority for unpaid wages and superannuation. Directors can face personal liability for insolvent trading - incurring debts when the company cannot pay them. Queensland insolvency lawyers advise directors on duties and potential liabilities.

Voluntary Administration

Voluntary administration provides breathing space for struggling companies. Directors appoint an administrator who investigates whether the company can be saved through restructuring. Creditors meet to decide the company's future. A Deed of Company Arrangement (DOCA) can allow the company to continue trading while repaying creditors over time. Administration provides temporary relief from creditor action. It's used when companies have prospects of recovery or a restructure could return better outcomes than immediate liquidation.

Debt Agreements

Part IX debt agreements are formal alternatives to bankruptcy for individuals with regular income and unsecured debts under statutory limits (currently $127,068.90 in debts). Debtors propose to pay creditors a portion of debts over time, typically three to five years. If creditors representing 50% in value accept, all unsecured creditors are bound. Debt agreements avoid bankruptcy but are recorded on the National Personal Insolvency Index and affect credit ratings. They're suitable when you can make regular payments but cannot pay debts in full.

Creditors' Rights

Creditors can protect their interests through security agreements, guarantees, and timely debt recovery. When debtors become insolvent, secured creditors have priority over unsecured creditors. Unsecured creditors can issue bankruptcy notices or creditor's petitions against individuals, or wind up companies through court applications. Proving debts in insolvency administrations is essential to receive distributions. Creditors can challenge preferences, uncommercial transactions, and director-related transactions. Insolvency lawyers represent creditors' interests in administrations and litigation.