Key Activities of an Auckland Insolvency Lawyer
Insolvency is defined as a state where individuals or organizations can no longer meet their financial obligations by failing to pay due debts to their creditors. Parties involved strive to solve the issue of insolvency as insolvent trading may amount to a criminal offense, and directors may suffer disqualification. As such, an Auckland insolvency lawyer plays an important role in resolving insolvency scenarios to avoid further financial damages to the insolvent party.
The role played by an Auckland insolvency lawyer is, therefore, essential in facilitating the process of debt settlement by an individual or organization to the creditors. Here are three main activities carried out by an insolvency lawyer:
Restore Debtor Company to Trading
Insolvency lawyers are knowledgeable about matters of individual and organisational insolvency. As such, their focus on ways to help an individual or company to return to profitable trading. One of the ways insolvency lawyers do this is by seeking a court order to prevent the creditors from taking further action against their client. During this time, the lawyer negotiates an arrangement with creditors to compromise or reschedule the debts owed.
Whenever such an arrangement succeeds, companies or individuals can, therefore, look at alternative sources of capital to settle their debts. Such sources could be the sale of shares or even turning to your savings vault. Throughout this process, the insolvency lawyer advises their client on the most viable and economical way of settling the debts to avoid further financial implications.
Maximise Return to Creditors
Another aspect of insolvency and debt settling that insolvency lawyers deal with is the maximising of the debt repayment to creditors. Any compromises and arrangements made by creditors and the insolvent party should be honoured, and an insolvency lawyer must ensure that this happens. As such, insolvent parties need to consult their lawyers about ways to complete debt repayment within the agreed timelines.
By facilitating the full payment of debts to creditors, insolvency lawyers help companies, individuals, and other organisations to return to trading capacity by settling or coming to arrangements about their debts.
The process of full debt repayment helps unfortunate but honest debtors to maintain their credit rating. This can help them find other sources of capital with which they can revive their business activities and maybe help financially restructure the business. Overall, insolvency lawyers help individuals and companies from getting to the extreme point of filing for bankruptcy.
Forced Selling Scenario
When companies and other business entities become insolvent, an insolvency lawyer can assist in finding ways in which those entities can source capital to pay off their debts. In dire circumstances, some companies are forced to sell their property or sell their shares to the public. Where directors do not favour selling all their shares or some of its properties, insolvency lawyers can advise accordingly.
Insolvency Lawyer – Their Role
Insolvency lawyers are essential in representing debtors in situations of insolvency. As such, their key activities in this scenario include advising the debtors to help return their businesses to profitable trading, working out arrangements to ensure maximum payment of debts, and resolving forced selling scenarios.
It is a difficult time for everyone involved so it takes a lot of care to make sure processes are followed, experience to get the best outcome, and consideration to help people in tough emotional circumstances.
If you or your business gets into financial difficulty, contact an Auckland insolvency lawyer immediately. Do not commit to anything until you have spoken to a lawyer such as McVeagh Fleming. You can find out how they can help by visiting https://mcveaghfleming.co.nz.