What is the Cost of Insolvency

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what is the cost of insolvency

Cost of insolvency can be a deciding factor when thinking about enforcing a judgment or court order.

Updated for 2023 – 2024 financial year

The filing fee for bankruptcy is $4,425.00 (corporate applicant) or $1,845.00 (human applicant) with short form amount of $2,990.00 allowable to be claimed.

The filing fee for winding up in the Federal Court is $4,760.00 (corporate applicant) or $1,635.00 (human applicant) and the filing fee for winding up in the Supreme Court is $3,086.70 (corporate applicant) or $1,306.70 (human applicant). 

The short form amount of $4,653.00 is allowable to be claimed.

If you have an order of the Court or a Judgment, and you have not received payment as against that debt, then you are able to commence enforcement proceedings.

In certain circumstances, if the judgment debtor is a person, you are able to serve this debtor with a bankruptcy notice, or if the judgment debtor is a company, serving that debtor with a statutory demand.

If a debtor is insolvent then a Court will likely order the company wound-up or the person made bankrupt. If you are thinking about insolvency, then it is vital that you speak to a professional

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Cost of Insolvency – Bankruptcy

The cost of insolvency application for a bankruptcy notice will cost a filing fee of $470.00 with Australian Financial Security Authority (AFSA) and approximately $600.00 plus GST to $800.00 plus GST and outgoings as an estimate of a solicitor’s professional fees plus $33.55 for a bankruptcy search.

If the judgment debtor does not comply with the bankruptcy notice then they will have committed an act of bankruptcy, allowing you to file a creditor’s petition.

The cost of insolvency for a creditor’s petition for a corporate applicant (if you are suing in your company name) will cost $4,425.00 or if you are suing in your personal name $1,845.00 as a filing fee in the Federal Circuit Court plus $2,990.00 plus GST and outgoings as an estimate of lawyers professional fees based on the short form amount for drafting the application and supporting affidavits.  There will also be a hearing which we will need to attend at the lawyer’s hourly rate.

Fees in the Federal Court- CLICK

Fees in the Federal Circuit & Family Court – CLICK

You are able to claim “costs as between party and party” which means:

the costs that have been fairly and reasonably incurred by the party in the conduct of the litigation

including the issuance of the bankruptcy notice, the creditor’s petition and the hearing.

However it is more likely that the registrar will make an order for the short form costs in the application.

It is  advisable that you instruct a solicitor to write to this debtor again prior to serving them with a bankruptcy notice, informing the debtor that you have instructed a solicitor to serve him with a bankruptcy notice, informing the debtor of the costs you will have to pay, which can be claimed on top of the judgement debt, again demanding that they pay the judgment sum within seven (7) days. This might encourage him to pay, or aid in any application for costs in the bankruptcy proceeding.

Costs of Insolvency – Statutory Demand and Winding Up

If your debtor is a company, and you think that the judgment debtor has assets then you can serve that company with a statutory demand for payment. Failure to comply with a statutory demand allows you to commence proceedings to wind up the company in liquidation. All assets, bank accounts etc. are frozen and realised to satisfy the creditors.

The cost of a solicitor drafting and serving a statutory demand will be around $800.00 plus GST and outgoings to $1,200.00 plus GST and outgoings as an estimate of their professional fees. If the judgment debtor does not respond then they are presumed to be insolvent. Based upon this presumption of insolvency you can apply to wind it up.

The cost of winding up a company for a corporate applicant (if you are suing in your company name) will cost $4,760.00 or if you commence proceedings in your personal name $1,635.00 as a filing fee in the Federal Court plus $4,653.00 plus GST and outgoings as an estimate of a solicitor’s professional fees based on the short form amount for drafting, filing and serving the originating process and supporting affidavits.

The cost of winding up a company for a corporate applicant (if you are suing in your company name) will cost $3,086.70 (corporate) or $1,306.70 (personal) as a filing fee in the Supreme Court.

There will also be a hearing which a solicitor will need to attend.

Cost of Insolvency – Moving Forward

We recommend that you instruct a solicitor to write to the judgment debtor prior to serving them/it with a bankruptcy notice, or a statutory demand, informing the debtor of the costs you will have to pay, which can be claimed on top of the judgement debt, again demanding that he pay the judgment sum within seven (7) days.

This might encourage the judgment debtor to pay, or aid in any application for costs in the proceeding.

Alternatively, you can instruct a lawyer to commence one of the enforcement options outlined above.

If a debtor is insolvent then a Court will likely order the company wound-up or the person made bankrupt. If you are thinking about insolvency, then it is vital that you speak to a professional

SCALE FEES – DEDICATED TEAM – PROVEN RESULTS

GET A FREE FEE ESTIMATE TODAY

OR CALL: 1300 545 133 FOR A PHONE CONSULTATION

Disclaimer: The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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