O'Brien Palmer - Chartered Accountants and Insolvency Practitioners

Insolvency Checklist

A solvent person is defined in Section 95A of the Corporations Act and Section 5(2) of the Bankruptcy Act as being one that is able to pay all the person’s debts as and when they become due and payable. These definitions support the proposition that solvency is determined by reference to cash flow. In addition, there are key operational and financial practices that may put a company at risk of becoming insolvent.

Setout below is the OBP Insolvency Checklist. If you answer “Yes” to one or more of the following questions, then your business may be insolvent or at risk of becoming insolvent at some time in the future.

1	Are creditors being paid outside their normal terms of trade (eg 30 days)?	Yes No
2	Has the entity conducting the business received final demands for payment from creditors?	Yes No
3	Has the entity received: - Letters from collection agencies/solicitors for payment of debts; - Statutory Demands for payment; - Judgements and/or Warrants issued against the business; - Winding up/Bankruptcy notices?	Yes No
4	Has the entity been placed on COD terms with essential suppliers?	Yes No
5	Does the entity pay one supplier in priority to another to receive goods/services?	Yes No
6	Have any of the BAS/IAS of the entity been lodged significantly later than the due date and/or are there any outstanding BAS/IAS?	Yes No
7	Are there any outstanding statutory liabilities of the entity, including: - PAYG/GST; - Compulsory superannuation; - Workers Compensation; - Payroll Tax?	Yes No
8	Has the entity entered into an instalment payment plan with any of its creditors and/or the ATO?	Yes No
9	Has the entity made any payments to creditors for rounded lump sum amounts, which are not reconcilable to specific invoices?	Yes No
10	Has the entity withheld cheques until monies become available and/or issued post dated cheques to creditors?	Yes No
11	Have any cheques and/or payments of the entity been dishonoured?	Yes No
12	Is the overdraft (if applicable) of the entity steadily increasing or at its maximum limit?	Yes No
13	Is the entity unable to raise further finance and/or sell surplus assets?	Yes No
14	Are you unable to inject additional capital into the entity?	Yes No
15	Are the current liabilities of the entity in excess of its current assets?	Yes No
16	Are total liabilities of the entity in excess of its total assets?	Yes No
17	Does the entity have accumulated trading losses?	Yes No
18	Has the entity failed to prepare timely financial information to allow management to review its trading performance and financial position?	Yes No
19	Has the entity or its accountant failed to prepare a set of annual financial statements and a tax return in the past 12 months?	Yes No
20	Has the entity failed to prepare budgets and corporate plans?	Yes No

If you have answered “Yes” to any of the above questions, then we highly recommend that you either contact us immediately or you complete the form below with your contact details. This will allow one of the senior members of our team to contact you, by the end of the next business day, to discuss your financial position and if applicable, arrange for an obligation free meeting to discuss the options available to you and your business.

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Business Name(*):

Address:

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