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cases the presumption of insolvency applies and the company will have to rebut such
presumption.
Goode commented that the formulation of the test is deceptive in its simplicity since
it raises a number of questions not fully explored in English law. 58 The difficulty
lies with the word „debts‟ itself; whether the court should look into future debts and
if so, to what extent. 59 Courts in Australia have adopted a commercial approach to
the meaning and held that it "indicates a continuous succession of debts rather than a
calculation of debts existing on any particular day." 60
In applying the test, only liquidated claims which at the relevant time constitute
existing debts payable should be included. 61 Though in principle future, prospective
and contingent debts and liabilities should be ignored, courts still have to bear in
mind whether the company in question would be able to discharge its obligation
when it is time to do so. 62 The court, however, is reluctant to specify the time period
in the future because each case is different and peculiar to its own facts. 63
The fact that the company does not have sufficient cash to pay its debts as they fall
due is not a sufficient indication of insolvency for the company. 64 The company can
still resort to realizing its assets or borrowing, provided this is done within the
58 Goode above n3 at [4-15].
59 Ibid.
60 Bank of Australasia v Hall (1907) 4 C.L.R 1514 at 1528.
61 Goode above n3 at [4-18].
62 Ibid,; Bank of Australasia v Hall (1907) 4 C.L.R 1514 at 1528; Expo International Pty Ltd v Chant
[1979] 2 NSWLR 820; Re Kerisbook Pty Ltd (1992) 10 ACLC 619; see also Andrew Keay “The
Insolvency Factor in the Avoidance of Antecedent Transactions in Corporate Liquidations” (1995)
21 Monash Uni LR 305 at 314-316.
63 Keay, ibid, at 316.
64 Goode above n3 at [4-22].
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