Ann: Update on voluntary suspension, page-50

Hi Tradie

Firstly be clear on what you are asking. Keep in mind that insolvent trading leading to Director penalties/liability, and insolvency are two different things. Insolvency occurs at a point where the company cannot pay its debts as and when they fall due. We may be facing that scenario - see next paragraph. However the penalty rules affecting Directors regarding "insolvent trading" only apply if the Director/s knowingly incur debts at a time when they are aware the company will not be in a position to repay those new debts when they are due. Subtle difference. In other words, if the Directors stop incurring debts as of the time they become aware of this issue, they are not guilty of insolvent trading as far as I'm aware, albeit the company may be insolvent.

Regarding whether the company is insolvent or not as of now, I think the answer depends on two things: firstly on how much and how quickly they can recover the missing funds. If the money is back in a few weeks or a month that will hopefully stave off an insolvency problem. Secondly and if funds not recovered,it hinges on the likelihood and quantum of their ability to raise working capital at short notice. You'd have to think that's not a hopeful scenario!

Hope that helps.