Company debt can happen very easily. A few quiet months and all of a sudden the debt is significantly beyond the reach of the business owner. If you have company debts that are out of control then give us a call. At Bankruptcy Experts Shellharbour we are company debt specialists. For a completely free consultation contact 1300 795 575.
If my business is in difficulty should I call a liquidator?
Frequently when a company owner finds him or herself in an impossible financial position they are advised by either their financial advisor, their lawyer or even their good friends to speak to a liquidator and put the company into liquidation. Be cautious about this, as the belief is that because you are paying the liquidator they will protect your best interests and assist you to get back on your feet. BUT THIS IS NOT THE CASE!
Liquidators are not on your side …
Although liquidators, administrators and receivers are usually good people, their responsibility, once they are appointed, is to your creditors (people you owe money to) and to the courts. They are to collect as much money as possible from the liquidated business to pay off these creditors. That’s it. If for one second you think they will look after your best interests, you are regrettably mistaken.
Once you have signed those papers to appoint the liquidator to your business, that is it! You no longer have any say over the company. The liquidator will do whatever they feel is in the best interests of the creditors and, guess what, in many cases you have just paid for the death of your own company.
One Business Owner’s Story …
I knew I was in hot water when the bank wouldn’t lend me any more against the house. This business has been in the family for decades and the thought of losing it was too much. I called my financial advisor and my accountant, and they both encouraged me to get a liquidator. They said that’s the only way out. I knew I had significant debt, but it just seemed like I had no alternatives. My accountant said that because I am paying for the liquidator and that it was going to be a voluntary liquidation that I would be taken care of. WRONG!
I found some liquidators. They seemed pleasant and capable and they said they would help me as much as they could to work through my financial issues. I had no idea what was about to happen. They seemed to understand my situation; I had some cash coming in and a sale of some equipment going through.
The minute I signed the papers the liquidator asked for the keys and that was it. Everything was taken out of my hands, the sale of the equipment was totally taken over, the money I had coming in was gone, they took over everything; it was all gone. The next day my bank accounts were frozen and what I thought was going to be a helpful situation turned out to be my worst headache. I lost the lot!
What is the best strategy if my company is in trouble?
There is a secret to addressing this process: PREPARATION. There is plenty you can do to prepare yourself before you give up the control of your company to a liquidator. In fact, most of the stress can be taken care of in a way that will work for you, not against you. This sounds easy but in fact there is a substantial amount of regulation and many rules in place surrounding this procedure, so always get some advice about this. If you are uncertain what you should do and just need some advice, just give us a call on 1300 795 575. Bankruptcy Experts Shellharbour specialises in pre-liquidation strategies.
What if someone else is winding up my company?
If someone is winding up your business like the ATO or a creditor, they will have a liquidator appointed by the courts. You do have some choices here, and there is plenty you must know and do to protect yourself. The key here is to get some advice, and include us as soon as you can in this process. It is that simple. Normally you will receive a notice in the mail or a court order, and if you have one of these give us a call because the longer you ignore this the fewer options you have. Call us at 1300 795 575.
Can I continue to run a business if I have been the director of a company that has been liquidated?
Yes, you can continue to run a business. No, you can not still be the director of the company. This is one of the most frequent questions we are asked. Of course there are rules that need to be adhered to, and you need to ensure you structure things the right way moving forward. Liquidation does not need to be the end of your business activity, as so many people think it is. We can help you do this and restore a new life after liquidation. There are choices, but in most cases people simply don’t know what they are. At Bankruptcy Experts Shellharbour we can clarify your options and help you achieve your goals.
What do I need to do?
Be prepared. Liquidators don’t work for you no matter how much you pay them. Your creditors don’t work for you no matter how much of their bill you pay them. Your friends love you but usually have no concept what they are suggesting to you. They’ve most likely heard that if you want to start again you need to get rid of the company through a liquidator, and it is an easy assumption to make that if you pay a liquidator they will work for you. Please note, THIS IS NOT THE CASE! WE WORK FOR YOU– no one else does. You are our client and we are only interested in getting the result you want. For a free consultation call 1300 795 575.
What do we do?
At Bankruptcy Experts Shellharbour we help you work through your choices. We then help you take the most suitable action. Then we work toward obtaining the best possible outcome for you and protecting whatever we can. We communicate the right way with your creditors and the liquidator, if needed.
What if I have a Tax Debt?
If you have an ATO debt, don’t disregard your mail! The ATO will often issue companies Wind-Up Notices or Statutory Demands, or even a Director’s Penalty Notice on you or your company. If this is the case, you must act quickly! Sometimes communicating is all that’s required, sometimes winding up the company is the answer and sometimes negotiation is required. Whatever is required, we will help you work through a plan, and we support you the whole way.
What If I have received a notice from the Australian Tax Office ?
If you have received one of these notices DO NOT PERMIT THEM EXPIRE. Get in touch with us as early as you get them and we will assist you work through the options available to obtain the most effective and optimal outcome for you. Once we have done an assessment of your business and the circumstance we recommend an action plan, then it is your decision whether you continue from there. Contact Bankruptcy Experts Shellharbour for a free consultation today at 1300 795 575.
ATO – DIRECTOR’S PENALTY NOTICE
Directors Be Warned
What is critically important is that every director understands these changes and the serious nature of them and how they will impact you and your company. If you have an ATO debt then you may be issued with a Director Penalty Notice by the Australian Tax Office.
What does it mean if I get a Director’s Penalty Notice?
The intention of a Director Penalty Notice is to make directors accountable for their company’s unpaid ATO debt. As a director, you will no longer have the chance to avoid personal liability for a PAYG tax debt, which comes with a Director Penalty Notice, if the following applies:
- Your debt is older than three months and or your debt was not reported to the ATO within three months of the lodgment date.
- As a director, you may also be liable for your company’s unpaid superannuation liability when you receive a penalty.
- Directors, and associates of directors, may now also be liable for a new personal income tax liability. This will make directors and their associates possibly liable for a company’s unpaid PAYG withholding liability.
Do I have any options?
Yes. If your company has a tax debt or you have received a Director Penalty Notice, it is necessary that you secure qualified guidance, as we have numerous options you may want to think of. Simply call us on 1300 795 575.
What if I pay no attention to the notice?
There can be important consequences for not following the tax office’s notice; this can include losing personal assets such as vehicles, real estate or shares, and personal bankruptcy for the company’s debts. In other words, the Australian Tax Office will personally bankrupt you.
What is a Statutory Demand?
A Statutory Demand is a demand made under 459E of the Corporations Act. This document is not issued by the Court. A Statutory Demand necessitates that the Debtor Company pay a specified amount of money within 21 days from the date of the delivery of the demand on the Debtor Company.
If the debt is contested or if there are irregularities in the document, the company should immediately secure independent legal advice and apply to the Court to set the demand aside on the basis that the debt, then the subject of the Statutory Demand is absolutely questioned. This application MUST be made within 21 days.
What if the Statutory Demand expires unsatisfied?
Section 95(A) of the Corporations Act provides that a company is solvent if it has the ability to pay its debts as and when they fall due. Accordingly, the test as to whether or not a company is insolvent is that it is unable to pay its debts as and when they fall due.
Under Section 459C of the Act, the company is presumed to be insolvent if a company has failed to comply with a Statutory Demand. Accordingly, the delivery to a Debtor Company and non-compliance with the Statutory Demand will provide “proof,” which is sufficient for a creditor to apply to the Court for the appointment of a liquidator to the company.
Can the Statutory Demand just turn up in the post?
Yes, it could be delivered personally or simply turn up in the mail as registered post.
WINDING UP NOTICE.
What is a Wind-Up Notice?
A wind-up notice usually follows a Statutory Demand. If a company is unable to pay its debts then the Court has the power to wind it up and appoint a liquidator whose responsibility it is to turn the assets into cash and disburse the cash in the order set out in the Corporations Act. In short, this notice is essentially a letter informing you that on a certain date a liquidator will be appointed by the courts to take control of your company if you don’t pay the debt.
Who can send me a Wind-Up Notice?
The creditor who obtains the appointment of the liquidator and the liquidator take priority in connection with their expenses as do specific employee entitlements. The balance is distributed equally between unsecured creditors.
Will I be personally accountable for my businesses debt?
No. The liquidation of a company does not automatically mean the director will be made bankrupt; however, the process of winding up a company is similar to the process of having a person declared bankrupt. Having said that, the ATO can issue a Director’s Penalty Notice at any moment, so it’s wise to act promptly. For a free consultation phone us on 1300 795 575.
What happens if I can not pay the debt within the 21 Days?
A liquidator will be appointed and you will no longer be the director of your company. The court will choose a liquidator who then assumes complete command of your company. All of the clients, bank accounts, assets, cash, money that’s owed to the company and your properties are no longer yours. Put simply, it’s over. The company you have built over the years is no longer yours. All the assets will be sold, your business, shop or factory will be taken control of by the liquidator (they will even re-key the locks) and your services are no longer required. Every area of your business will now be under the management of the liquidator.
Do I have any options before the liquidators taking control of my company?
Yes. We offer a free initial consultation to help you work through this problem. Our team of specialists can spare you tremendous misery. You must act immediately! Calling us the day before the liquidator turns up is useless. Phone Bankruptcy Experts Shellharbour today on 1300 795 575.
Do I have any alternatives once the liquidators have turned up?
No. The company is no longer in your control.
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