Getting the Appointment of an Insolvency Practitioner Right

There are certain circumstances in which the appointment of an insolvency practitioner can become exceptionally difficult, even where everyone is agreed that an appointment is essential and should proceed as soon as possible. This is a reminder to pay careful attention to corporate governance and the need to make sure businesses can function, even in the vagaries and vicissitudes of life.

Kahlefeldt¹ concerned the validity of the respective resolutions of two company directors to appoint a Voluntary Administrator under section 436A of the Corporations Act 2001 (Cth) ("the Act").

Pursuant to section 436A of the Act, a company board must pass resolutions to the effect that:

• In the opinion of the directors the company is insolvent or likely to become so; and