Could a cashflow statement prove solvency?
Ostgro Australia Pty Ltd v Syarrum Ostriches WAS Pty Ltd [2002] WASC 140 (29 May 2002) Ostgro Australia Ltd sold 240 wet salted ostrich skins to Syarrum Ostriches WAS Ltd (SAWL) for $36,720. The cheque bounced. Ostgro issued a statutory demand for payment which was not met nor was it challenged within the required 21-day period. This meant they were presumed to be insolvent. Ostgro then brought a winding-up application against SAWL on the grounds of SAWL’s insolvency. SAWL didn’t dispute the debt but opposed the application on the ground that they were in fact, solvent! In order to show this, SAWL wanted to produce statements in Court outlining their cash flow. Was SAWL entitled to rely on cash flow statements that appeared to be inherently unreliable and which were based on uncertified estimates? No. The Court declined to receive the statements as they were not an accurate financial record in the sense that a financial statement could be prepared from them. Even if SAWL’s cash flow st
