A director loan adds cash and may add another repayment obligation

The new bank receipt is only half the transaction

A director transfers money to the company before a winding-up hearing and points to the improved bank balance as the answer to the financial problem. Give the lawyer and accountant the terms of that funding as well as the receipt. If the money is a loan, the company may also have a repayment obligation that belongs in the assessment.

Establish what was actually agreed

Collect the funding agreement, transfer record and relevant communications. Identify the lender and borrower, the amount and any interest or repayment conditions. Do not label the transaction equity simply because that description makes the balance sheet look stronger. Ask the accountant and lawyer to resolve unclear classification from the actual facts and documents.

Prepare complete information for the proceeding

The Federal Court's winding-up guide addresses solvency evidence when a company opposes an application based on an unsatisfied statutory demand. Have the legal team assess what evidence is required here. This article does not determine solvency or say that a director advance proves or disproves it. The assessment needs the obligations created by the funding as well as the money received.

Source: Federal Court: Winding-up proceedings based on an unsatisfied statutory demand

Compare two different funding assumptions

Imagine a director advances $50,000. One draft agreement says repayment can be demanded immediately, while the director recalls agreeing a later date. That uncertainty matters to the cash plan. Do not choose the convenient version or treat a verbal intention to wait as a completed amendment. Have the actual arrangement clarified and documented through proper advice.

Avoid counting the same benefit twice

Ask the accountant to show the receipt and the corresponding treatment in the financial information. Do not report the injection both as trading revenue and as a financing receipt, or omit an associated liability merely because the lender is supportive. Keep any proposed waiver or conversion separate from a change that has actually been completed and professionally assessed.

Give the advisers a supported funding position

Provide the confirmed terms, accounting explanation and evidence of money received. Explain any later movement or proposed repayment promptly. A helpful injection can give the company room to act, but its effect should be understood on both sides of the transaction. A larger bank balance alone does not explain whether the funding has resolved the company's ability to meet its obligations.