What is an Insolvency Lawyer?
The most basic understanding of insolvency is when a debtor cannot pay his debts. However, the test to determine insolvency is to conclude whether or not the debtor’s liabilities exceed his assets, as the inability to pay debts, in itself, is not necessarily indication of insolvency. As such the courts have drawn a distinction between factual and commercial insolvency. Factual insolvency is where a debtor’s liabilities exceed his assets, while commercial insolvency refers to the scenario in which a debtor is unable to pay his debts due cash flow or other problems, but his assets still exceed his liabilities.
An insolvency lawyer serves to assist in the process. This means the insolvency lawyer may advise the debtor, or act for his creditors and other stakeholders. The process may include the restructuring of debts, but if the company, organisation or individual person cannot be rescued due to insufficient financial backing, or because his liabilities exceed his assets, the insolvency lawyer, or insolvency lawyer South Africa, will assist in the proceedings of becoming insolvent and the sequestration of the debtor’s estate. There are more ways than one in which a person, organisation, or company may be declared insolvent. An insolvency lawyer serves to assist in the whole process.