Banking & Finance: Insolvency Specialisation in New Zealand
The Banking & Finance practice area focuses on the rules and laws that govern money, loans, and financial transactions. Within this area, the Insolvency specialisation deals with situations where individuals or businesses cannot pay their debts.
What is Insolvency?
Insolvency happens when a person or a company owes more money than they can pay back. For example, if a small business has taken out loans to buy stock but is not making enough sales to cover those loans, it may become insolvent.
How Does Insolvency Work in New Zealand?
In New Zealand, there are specific laws that guide what happens when someone is insolvent. These laws help protect both the person or business that owes money and the creditors (the people or companies they owe money to).
Types of Insolvency
- Personal Insolvency: This involves individuals who cannot pay their debts. They may apply for a debt repayment plan or bankruptcy.
- Corporate Insolvency: This involves companies that are unable to meet their financial obligations. They may go into liquidation, where a liquidator sells off the company’s assets to pay creditors.
What Do Insolvency Lawyers Do?
Insolvency lawyers help clients understand their rights and options. For example, if a business is facing insolvency, a lawyer can advise on whether to restructure the business, enter into a voluntary arrangement with creditors, or go into liquidation.
Why is Insolvency Important?
Understanding insolvency is crucial for both individuals and businesses. It helps them make informed decisions about their financial future. For instance, knowing when to seek help can prevent further financial trouble and allow for a fresh start.
Conclusion
The Insolvency specialisation within the Banking & Finance practice area is essential for navigating tough financial times. With the right legal support, individuals and businesses in New Zealand can find solutions to their financial challenges and work towards recovery.