Administration is an insolvency procedure that involves either Voluntary Administration or a Deed of Company Arrangement. Administration is used regularly by companies experiencing financial distress, largely because directors are required to take steps to avoid trading while insolvent..
If a Director continues to trade while the company is insolvent; and incurs liabilities during that period, the director maybe personally liable.
It is a criminal offence (if dishonesty is evident) to knowingly incur debts while insolvent, with the maximum criminal penalty being up to five years in jail and a fine of up to $220,000. If your company is heading towards administration, contact us immediately to discuss options and strategies.
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