Dodd-Frank gives unprecedented power to the Treasury secretary to determine whether an insolvent financial company will be subject to OLA. The Act sets a high standard for invoking the authority, but the process is unnecessarily tainted by the involvement of a political appointee, even if he or she is acting in good faith.
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The executive committee of the British Surfing Association (BSA) has declared its limited company insolvent.
If a limited company becomes insolvent and cannot pay its debts, a liquidator will be appointed to collect and redistribute all the company's assets to the creditors.
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The scandal erupted last year over the illegal transfer of funds last year from insolvent Bank Bali to a company closely linked to the then ruling Golkar Party.
Its auditors judged that if the transaction went ahead the company would become technically insolvent.
And the reason that under law a company might have to cease trading immediately is that it is an offence (and a serious one) for the directors to allow the company to keep trading when it is insolvent.
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Without fresh injections of capital from shareholders or lenders, a company in this situation can quickly find itself insolvent.
The company insists that it is illiquid, not insolvent, but the size of the loan suggests that its problems go beyond a short-term cash crunch.
The Forte furniture company, founded when Mr. Formanowicz bought an insolvent state-run factory in 1992, exports about 80% of its products, nearly all to countries in the euro zone.
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The move comes after the company struck a deal in principle with its bankers in a bid to avoid becoming insolvent.
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