Insolvent Trading: Director Personal Liability
Insolvent trading is the mechanism that turns a company debt into your debt. Understanding when it starts applying is the difference between a business problem and a personal one.
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Business insolvency and director duties
Statutory definitions, personal director obligations, safe harbour guidelines, and practical distinctions between restructuring, administration, and liquidation.
Guides in this section
Restructure or Wind Up? A Director’s Guide
Most directors reach this question late, when the pressure is already heavy. This page sets out what actually separates restructuring from winding up, so you can tell which conversation you need to be having.
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Company Liquidation in Australia: A Director’s Guide
Liquidation ends a company and distributes what is left. This page explains how it works, what it means for a director personally, and when it is genuinely the right answer.
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Early Warning Signs Your Company Is Insolvent
Insolvency rarely arrives as a single event. This page sets out the signs that show up first, so you can tell the difference between a hard month and a company that is already past the line.
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What Does “Insolvent” Actually Mean?
“Insolvent” is a legal state with a specific test, not a general description of a business doing badly. This page explains the test, and why a profitable company can fail it while a loss-making one passes.
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Your formal options
Compare your options
01
Small Business Restructuring
Directors remain in office and continue daily trade. Fixed-fee appointment. Creditors vote on plan within roughly 35 business days. Significant write-downs possible.
02
Voluntary Administration
Control passes to an external administrator. High statutory costs and public investigation. Best suited for complex mid-market entities with over $1M liabilities.
03
Liquidation
Immediate cessation of trade and orderly realisation of assets. Company dissolved. Directors face public reporting and potential recovery claims.