CREDITOR RIGHTS, RESTRUCTURING AND TRUST LITIGATION
Insolvency Asset & Trust Disputes
A plain-English guide to oppression claims, breaches of directors’ duties, company deadlock, and how share buy-outs and winding-up work in Australia.
- Experienced senior lawyers
- Clear pricing guidance
- National practice
Understanding insolvency and trust disputes
Your Guide
A company is insolvent when it cannot pay debts as and when they fall due. Formal processes include voluntary administration, liquidation, restructuring and receivership, while personal insolvency is governed by bankruptcy law. Each process has strict gateways, priority rules and review rights.
Trust and asset disputes can involve the validity and administration of a trust, trustee duties, access to information, distributions, removal of trustees and claims that trust property should be available to creditors. The facts, governing instrument and statutory context must be analysed together.
Jaswinder Says
In insolvency work, timing and evidence determine leverage: a missed deadline or untested assumption can change the entire recovery position.
— Jaswinder (Jas) Sekhon · Director / Principal
How the Process Unfolds
FROM DEFAULT TO REVIEW AND DISTRIBUTION
Insolvency disputes usually begin with default, a demand, an appointment or a disagreement about control of assets or trust property. The appointment of an administrator, liquidator, receiver or trustee changes who controls the process and how claims must be advanced. Creditors often need to lodge proofs, preserve security rights and respond quickly to reports, meetings and proposed distributions.
Clawback, priority and trust claims may require detailed tracing, expert accounting evidence and court directions or substantive proceedings. The pathway below is a high-level guide and must be adapted to the
appointment, asset position, security structure and limitation periods.
Default or dispute arises
A payment default, demand, appointment, trustee decision or asset-control issue triggers urgent legal and commercial review.
External administrator appointed
Control may pass to an administrator, liquidator, receiver or bankruptcy trustee, with statutory notices and reporting obligations.
Proofs of debt & claims
Creditors lodge proofs, administrators adjudicate claims and security, priority and trust rights are analysed.
Clawback or trust proceedings
Voidable transaction, insolvent trading, tracing, breach of trust and recovery claims are investigated and commenced where viable.
How we instruct, brief and work with barristers counsel: our winning litigation strategy
Priority, distribution or settlement
Competing claims are resolved, distributions are proposed and disputed entitlements may be negotiated or determined.
How we instruct, brief and work with barristers counsel: our winning litigation strategy
Review & appeal
Decisions on proofs, remuneration, directions, priority or substantive liability may be reviewed or appealed.
Indicative Insolvency And Trust Dispute Cost Meter
INDICATIVE CUMULATIVE COSTS AND TIME
The cost profile depends on whether the issue is confined to creditor review, requires an administrator’s determination, proceeds to winding-up or involves complex trust and clawback litigation. Forensic accounting, document reconstruction, multiple entities and disputed beneficial ownership can materially increase the work required.
The charts are illustrative and do not replace a written scope or estimate for the particular appointment and recovery strategy. A disciplined merits and recoverability assessment should be completed
before significant litigation expenditure is committed.
Recovery strategy should be tested against asset availability, security, priority, limitation periods, the administrator’s evidence and the likely net return after legal, expert and insolvency-administration costs.
Videos, Guides and Articles
INSIGHTS AND PRACTICAL GUIDANCE
Use these resources to understand the procedure, prepare more effectively and identify the questions that should be addressed before the next stage.
The titles and summaries below are editable placeholders for the final published video and article links.
VIDEOS & GUIDES
Voluntary administration, liquidation and receivership
Who controls the company, what happens to claims and how creditor rights differ.
Voluntary administration, liquidation and receivership
Who controls the company, what happens to claims and how creditor rights differ.
MORE ARTICLES BY JASWINDER (JAS) SEKHON
ASSET PROTECTION MOVES INTO THE MARRIAGE? GAMBLING & WASTEFUL SPOUSES.
1. What is the issue?
The issue is whether “addbacks” — assets wasted, spent, or hidden by one spouse —
Court Intervention Held Necessary For General Dysphoria-Related Medical
Keywords: Family Law – Medical Procedures –
Full Court of Family Court Finds No Child Support Resulting Trust Favouring the
What is the Issue?
The case of Bass & Bass and Anor [2016] FamCAFC 64 (29 April 2016) was heard
Test recovery, priority and control before value disappears.
- Urgent creditor and director advice
- Trust tracing and forensic recovery strategy
- Court, administrator and stakeholder representation
Key terms defined
Loream Ipsum
Oppressionconduct of a company’s affairs that is unfairly prejudicial to one or more members.
Deadlocka stalemate usually between 50/50 owners that stops the company being managed.
Derivative actiona claim brought in the company’s own name by a member when the directors will not act.
Buy-out ordera court order that one party purchase another’s shares at a set value.
Winding upthe formal closing of a company, with its assets sold and distributed.
Fiduciary dutythe obligation of a director to act loyally in the company’s interests.
Frequently Asked Questions
COMMON QUESTIONS
Practical answers about the process, deadlines, costs, evidence and likely next steps.
These responses are general information only and should be checked against the facts and applicable jurisdiction.
A company is insolvent when it cannot pay its debts as and when they become due and payable.
Administration explores rescue or a deed arrangement; liquidation winds up the company and distributes assets.
A creditor submits the prescribed proof and supporting evidence to the external administrator for adjudication.
Potentially, if the transaction is voidable under the statutory tests and the available defences do not apply.
Priority depends on security, statutory employee priorities, costs of administration and the applicable distribution rules.
A court may remove and replace a trustee where the trust’s proper administration requires it.
That depends on ownership, trust terms, trustee indemnity rights and whether the structure or transactions are successfully challenged.
Yes, wholly or partly, but the creditor may have review rights within a strict timeframe.
Directors may face liability if a company incurs debts while insolvent and the statutory elements are established.
Many are. Proof reviews, set-aside applications, voidable transaction claims and appeals all require prompt attention.Directors may face liability if a company incurs debts while insolvent and the statutory elements are established.