What is an insolvency notice alert? 

In Australia, an insolvency notices alert is a notification service provided by different companies such as CreditorWatch, to alert subscribers to new insolvency notices related to companies or individuals such as external administrations, winding up applications (voluntary or court mandated), and proposed company deregistrations. Insolvency notices are supplied to alert service providers directly from the ASIC insolvency notices website. 

What is insolvency? 

From a business perspective, insolvency refers to a situation where a company is unable to pay its debts as and when they become due. In other words, it means that a company is financially insolvent and is unable to meet its financial obligations. 

Insolvency options 

Insolvency Company Options 

When a company becomes insolvent, there are a few legal options available under Australian law, including voluntary administration, liquidation, and receivership. 

• Voluntary administration is a process where a company that is insolvent or likely to become insolvent appoints an external administrator to take control of the company and try to restructure it so that it can continue trading. 
• Liquidation is a process where a company is wound up and its assets are sold to repay its debts. 
• Receivership is a process where a receiver is appointed to take control of a company’s assets and manage them on behalf of the company’s creditors. The receiver is appointed by a secured creditor who has a registered interest over the company’s assets. 

In accordance with the Corporations Act 2001, insolvency and external administration-related notices are required to be published on the ASIC Published notices website. 

Insolvency Personal Options 

For individuals’ personal insolvency procedures are not recorded by ASIC. For individuals, available options are bankruptcy and personal insolvency agreements. 

• Bankruptcy is a process for individuals where their assets are liquidated to repay their debts. 
• Personal insolvency agreement is a formal, legally binding agreement between an individual and their creditors to settle debt. Designed to prevent the individual from going bankrupt, the agreement sets out how they will repay their debts. 

Insolvency can have serious consequences for individuals and businesses, including legal action, loss of assets, and damage to credit ratings. Individuals and businesses should seek professional advice if they are experiencing financial difficulties or facing insolvency. 

How does an insolvency notice alert work?

Insolvency notices are public notices that must be published when a company or individual becomes insolvent or bankrupt. These notices provide information about the insolvency or bankruptcy. It includes the name of the insolvent party, the appointment of a liquidator or trustee, and the date of the insolvency or bankruptcy. 

In Australia, insolvency and deregistration notices were previously published in national and state newspapers as well as the Business Gazette. They are now lodged electronically on the ASIC published notices website. 

To be automatically alerted to changes in circumstance of companies your business trades with you can subscribe to receive insolvency notice alerts from tools such as CreditorWatch’s RiskScore. By subscribing to an insolvency notices alert tool, you can receive real-time notifications of new insolvency notices related to specific companies or individuals. This can help you stay informed about changes in customers’ or vendors’ situations, potential financial risks, and allow you to act swiftly to protect your business. Insolvency notice alerts are included in CreditorWatch’s credit reports at no additional cost. 

Different types of insolvency business notices 

There are different types of company insolvency notices ASIC registers. Notices include: 

• Winding Up 
• Voluntary administration 
• Deed of Company Arrangement (DOCA) 
• Intention to deregister 
• Liquidation 
• Receivership 

How does insolvency work? 

Step One: Acknowledging the problem 

The first step toward insolvency proceedings is usually acknowledgement that a company has financial issues, in particular debts that cannot be paid when they are due. Insolvency is a serious situation. In Australia, directors who allow their company to continue to incur debts while insolvent can be penalised heavily. It is therefore an important step to take if you find yourself in this situation.  

Step Two: Insolvency proceedings 

Liquidation 

You can choose to appoint a registered liquidator if you decide that liquidation is the best route for your company. In cases of involuntary liquidation, a court orders a company be liquidated and appoints a liquidator to manage the process.  

To start liquidation proceedings, you must get agreement from shareholders or others invested in the company. Once agreement is reached, you can begin the process of voluntary liquidation. This includes: 

• Closing/deregistering the business 
• Identifying assets and selling them if applicable 
• Making payments to creditors 

Voluntary Administration 

Companies might select this option if they want to take some time to review their financial situation and believe that there is sufficient evidence that the business could avoid insolvency. The first step is appointing a voluntary administrator. They take over management of the business and will decide the next steps for the business to take.  

Once the administrator has reviewed the finances and reported on the company, they will make a recommendation as to the best course of action for the business. This could include putting the company into voluntary liquidation, returning the company to the control of the directors, or a decision to enter a Deed of Company Arrangement (DOCA). 

If voluntary liquidation is recommended, then a liquidator is appointed, and the company is wound up. 

If it is returned to the control of the directors, they take back the reins and move forward with the business. 

If a Deed of Company Arrangement (DOCA) is agreed on, this sets out exactly what steps will be taken to pay back debt owed. 

Receivership  

Receivership occurs when a secured creditor or a court takes the step of appointing a receiver to have debts repaid. The receiver takes control of the company’s assets and manages them to achieve the best financial outcome for creditors. This might include protecting and selling assets, and collecting debt owed. Note that this could mean selling the company.  

The receiver must pay out any proceeds in an order dictated by law. They must also alert ASIC to any financial irregularities they discover during the proceedings.  

Once the secured creditor has been paid out and any other duties have been fulfilled, the receivership ends. At this point, control of the company is returned to the company directors.  

What does insolvency mean for a company? 

Insolvency is a serious event for a company. While it might often lead to the winding up of a company, this isn’t always the case. Whatever the situation, insolvency will result in significant investigation into a company’s financial situation. This will help guide what the next best steps are for all parties involved, with the end goal of resolving unpaid debt.  

Can you remove an insolvency notice? 

In short no. An insolvency notice is a legally required public notification. It serves as an important record of a significant financial event that interested parties should be aware of.  

In exceptional circumstances, ASIC can withdraw a notice after publication. To request this, you must email ASIC with a link to the notice and provide sufficient evidence to support your request. 

If there is an error or a change in circumstance, you can replace a published notice. To do this, you lodge a new notice for publication, and select the ‘Replace notice’ function. The amended notice will then link to the first notice to that interested parties can see that the original notice has been superseded.  

Given the significant implications insolvency has, whether you’re an individual or a business you should seek professional advice if you are experiencing financial difficulties or facing insolvency. 

Stay ahead of bad debt

If you are concerned about protecting your business and cashflow, CreditorWatch can help. Tools such as RiskScore and our 24/7 monitoring and alerts help keep you informed of any changes in the financial circumstance of businesses you trade with. We also make managing your PPSR registrations faster and easier with PPSRLogic – a proven way to save time and manage your PPS registrations more efficiently. Contact our team today to better protect your business.