GROUP 11

Bankruptcy

Antiporta, Angelika
Lastimosa, Carl Angelo
What is Voluntary Insolvency?
• Is the term given to the process where you put your hands up and say
"my company is no longer financially viable and I need help". There are
two recognised tests for an insolvent business. They are:

• The cash flow test - You are unable to pay bills when they become due
or in the reasonably near future.
• The balance sheet test - Your company owes more than it owns i.e. its
assets are worth less than its lliabilities.
What is Involuntary Insolvent?
• is a legal proceeding in which a person or business
is requested to go into bankruptcy by creditors,
rather than on the person’s or business' own
accord. Creditors seeking involuntary bankruptcy
must petition the court to initiate the proceedings,
and the indebted party can file an objection to
force a case.
Creditor's Petition
• A creditor’s petition is a document lodged with a court by a
creditor (someone who is owed money) against a debtor (the
person who owes money to the creditor). The purpose of the
creditor’s petition is to ask the court to make a debtor bankrupt.
A court can do this by making a sequestration order against a
debtor.
• The requirements of a creditor’s petition are set out in the
Bankruptcy Act 1966 (Cth). These include:
• a) you must owe at least $5,000 to the creditor;
• b) the debt or debts must be for a specified sum of money;
• c) the debt or debts must be payable either immediately or at a
certain future time; and
• d) the ‘act of bankruptcy’ on which the creditor’s petition is based
must have been committed within 6 months before the filing of
the creditor’s petition.
Presence of Creditors
Objections
Discharge in Insolcency
• refers to a permanent court order that releases a
debtor from personal liability for certain types of
debts. It is sometimes referred to simply as a
discharge and comes at the end of a bankruptcy.
After it is issued, the court absolves the debtor of
the obligation to repay their debts, and creditors
are not permitted to contact or pursue debtors for
the outstanding debt.
Findings of Insolvency
Suspension of Payments
• Postponement by court order of the payment
of debts of one who, while possessing sufficient
property to cover his debts, foresees the
impossibility of meeting them when they
respectively fall due