Yes, you are correct Radge, that's why I termed it is...

Yes, you are correct Radge, that's why I termed it is "technically insolvent". Being unable to meet current creditors from cash is usually prima facie a good indicator of technical insolvency but...

The Corporations Act 2001 (Cth) (the Act) defines a person which is not solvent as being insolvent (s95A(2)). The term 'person' in this context includes a body corporate. The enquiry which should be made under the section to ascertain whether a company is insolvent is as follows: Is the company able to pay all of its debts as and when they become due and payable? To answer this question it may be necessary to consider the following:
cash reserves expected to be available at the time when debts become due;

- adequacy of working capital/cash flow;
- available (and reliable) sources of funding;
- the company’s ability to borrow;
- times and dates for payment;
- reliability of promises which have been made by creditors to pay; and
- assets available for realisation and the value they will realise (and whether this would involve the company in a voidable transaction or preference).


According to ASIC, the following are key operational and financial practices, which, in combination with other practices, indicate that a company is at significant risk of insolvency:

- poor cash flow, or no cash flow forecasts;
- disorganised internal accounting procedures;
- incomplete financial records;
- absence of budgets and corporate plans;
- continued loss making activity;
- accumulating debt and excess liabilities over assets;
- default on loan or interest payments;
- increased monitoring and/or involvement of financier;
- outstanding creditors of more than 90 days;
- instalment arrangements entered into to repay trade creditors;
- judgement debts;
- significant unpaid tax and superannuation liabilities;
- difficulties in obtaining finance;
- difficulties in realising current assets (eg stock, debtors);
- loss of key management personnel.