The minute a company reaches the point where they are unable to pay their employee's super and full entitlements, they should be deemed insolvent.
The Corporations Act 2001 (Cth) (s95A[2]) defines a person (including a body corporate) which is not solvent as being insolvent. The enquiry which should be made under the section to ascertain whether a company is insolvent is as follows:
Is the company able to pay all of its debts as and when they become due and payable?
To answer this question it may be necessary to consider the following:
- cash reserves expected to be available at the time when debts become due;
- adequacy of working capital/cash flow;
- available (and reliable) sources of funding;
- the company’s ability to borrow;
- times and dates for payment;
- reliability of promises which have been made by creditors to pay; and
- assets available for realisation and the value they will realise (and whether this would involve the company in a voidable transaction or preference).
So, in general,
"the minute a company reaches the point where they are unable to pay their employee's super and full entitlements" when they beome due and payable, they
possibly could be deemed insolvent.
Whether any action is taken against Directors for insolvent trading is another matter.