LWN801 Final: Insolvency-Law-Exam-Notes
Document Summary
Insolvency intro (cid:862)insolvency(cid:863): balance sheet test: total liabilities exceeds total assets or. Must establish inability to pay: (cid:862)allowances by creditors(cid:863) powell v fryer the full court of sa stated that it is not proper to take into account the failure to strictly enforce payment obligations by some creditors. Asic v plymin: range of factors considered indicating insolvency: including continuing losses; liquidity ratios below 1; overdue taxes; Poor relationship with bank resulting in inability to borrow further; no access to alternative finance; no ability to raise more capital; suppliers only providing goods cod; creditors unpaid outside trading terms; Assets may be considered part of estimation of ability to pay debts. Retrospective vs current assessment of insolvency: lewis v doran sometimes the test of is applied retrospectively (where they solvent prior to winding up) and sometimes prospectively i. e look to the future (or currently) (can.
