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Directors of Australian companies face significant personal monetary — and potential criminal and adverse professional — consequences if they allow the company to trade whilst insolvent.

Australian insolvent trading laws are harsher, and more frequently utilised to prosecute directors personally, than in many other jurisdictions including in the US and the UK.

Accordingly, frequent assessment of a company’s solvency by its directors is crucial, particularly in financially difficult times, as are active steps to address any potential insolvency.

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Author

Maria O’Brien is the head of the Restructuring & Insolvency practice at Baker McKenzie's Australian offices. She previously led the Firm's Asia Pacific Restructuring & Insolvency Working Group and is a member of the Global Restructuring & Insolvency Steering Committee. Maria is a Fellow of INSOL International (the International Association of Restructuring, Insolvency & Bankruptcy Professionals), and a director of the Turnaround Management Association (Australia). Maria has been ranked as a Leading Individual in Restructuring/Insolvency by Chambers Asia Pacific every year since 2011 and has been ranked in the peer-assessed Best Lawyers for Insolvency and Reorganisations every year since 2009. She was the winner of the International Women's Insolvency & Restructuring Confederation NSW's inaugural Award for Outstanding Female in the Insolvency and/or Restructuring Industry in 2009.

Author

David Walter is a partner in the Sydney office of Baker McKenzie, focusing on financial restructuring and insolvency. Since 2012, David has been recognised as a leading lawyer in Chambers Asia Pacific, Australian Financial Review - Best Lawyers, Legal 500 and Doyle's Guide. He publishes and speaks regularly on current issues and emerging trends in the Australian restructuring and insolvency market.

Author

Peter Lucarelli is a partner in the Melbourne office of Baker McKenzie. For over fifteen years, Peter has advised on complex commercial and contractual disputes and insolvency and restructuring matters.