Solvency? I'm no expert, but …

By Ewurama Appiah, Law Clerk at Matthews Folbigg, in the Insolvency, Restructuring and Debt Recovery Group

Proving solvency (or insolvency) can be a critical, complicated, and costly aspect of insolvency litigation. However, it is not always necessary to have an expensive expert to establish solvency. The Supreme Court of Queensland recently handed down a judgment in favour of a respondent to a winding up application, in which the respondent's solvency was established by documents other than external expert reports.

The Court's judgment confirms that the onus of proving solvency in winding up applications is on the Respondent opposing the winding up order. However, the judgment helpfully assists those companies with simpler operations and limited documentation to possibly reduce costs and rely upon alternative documentation that is not as costly as independent expert reports or audited accounts. Whether, and in what circumstances it is wise to do so will