Page 14 - GOING CONCERN AND RELATED ISSUES

GOING CONCERN AND RELATED ISSUES

Trading whilst Insolvent (continued..)

• Factual Insolvency: Liabilities (fairly valued > Assets (fairly

valued). Also referred to as Technical Insolvency!

• Commercial Insolvency: A state of illiquidity. Entity is

unable to pay its debts in the ordinary course of

business, even through its assets may exceed its

liabilities per its financial statements, and thus the entity

may be factually solvent.

• Trading whilst factually insolvent = possible recklessness

or even fraud.

• If you trade recklessly, what is your intention?

• Common Law, Companies Act, Unlawful Conduct!!!!

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