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Article
Assessing solvency for financially distressed companies
Bond Business School Publications
  • James Routledge, Bond University
  • Ray McNamara, Bond University
Date of this Version
1-1-2005
Document Type
Journal Article
Publication Details
Interim status: Citation only.

Routledge, J. & McNamara, R. (2005). Assessing solvency for financially distressed companies. Insolvency law journal, 13(4), 205- 212.

Access the publisher's website.

2005 HERDC submission.

© Copyright Lawbook Co., 2005.
Abstract

This article reviews past and recent authorities that have addressed the definition and application of the solvency test in s 95A of the Corporations Act 2001 (Cth). The discussion highlights that, when faced with financial distress, company directors need to carefully consider the solvency implications of their decisions. To generate cash to pay debts as they become due, directors may attempt to realise company assets, obtain additional secured or unsecured debt finance or reorganise the timing of payments with creditors. The discussion of relevant cases shows that the solvency implications associated with realisation of assets, use of assets as security and reorganisation of timing of debts due are relatively well settled. However, the situation with respect to the use of unsecured debt requires caution by company directors.

Citation Information
James Routledge and Ray McNamara. "Assessing solvency for financially distressed companies" (2005)
Available at: http://works.bepress.com/james_routledge/7/