Question Tag: Declaration

Insolvency is a state of financial distress in which a person or company is unable to pay their debts. Insolvency occurs when liabilities exceed the value of the company, or when a debtor cannot pay the debts they owe.

A Declaration of Insolvency suggests a company in receivership. The appointment of a receiver-manager implies a shift in control from the existing directors to the receiver-manager. The directors are required to present a written report of the state of affairs of the company to the receiver-manager. This statement must be filed by the directors with the receiver-manager within 14 days or such longer period that the receiver-manager may allow in writing, verified by an affidavit.

(2 marks)