Too often a business's financial trouble can spell the end of the business itself and a lifetime's hard work. It also sometimes spells the end of a business owner's personal assets!

My business is in trouble. Should I appoint a liquidator?

When a company director finds him or herself in an impossible financial position they are often given well-meaning advice that unfortunately can hurt them even further. They are often advised by their accountant, their solicitor or even their friends to contact a liquidator and place the company into voluntary liquidation. Many people believe that because you are paying the liquidator they will look after your best interests and help you to get the business and you back on your feet. NOTHING IS FURTHER FROM THE TRUTH.

Liquidators are not your friends!

A liquidator's responsibility is not to the business owner. It is to the creditors (people you owe money to) and to the courts. Their role is to recoup as much money as possible from the liquidated company's assets and to pay off the creditors. That's it. There is no obligation for a liquidator to look after your best interests. You do not even factor in their equation.

As soon as you sign the documents to appoint a liquidator you no longer have control over the company. The liquidator will act in what they believe is in the best interests of your creditors. In many cases you have just paid for your own business's death.

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One business owner's story...

My accountant and I both knew my business was in trouble. After doing the sums he advised me to appoint a liquidator to help resolve the situation and stop it getting worse. I was told that because I was paying for the liquidator and that this was a voluntary liquidation and not a creditor forced liquidation that I would be looked after. Boy was I wrong!

I met with the liquidator and they seemed nice professional people. They told me they would help me as much as they could to work through my financial issues. Wow, was I in for a shock. They seemed to understand my predicament, I had staff to consider and had cars lined up out the door waiting for repairs. However, the minute I signed the paperwork the liquidator asked for the keys to the business premises and absolutely everything was taken out of my hands. I was locked out of my own business. I couldn't even let my customers know what was happening with their own cars. The next day my bank accounts were frozen. It was my worst nightmare. I lost everything!

What is the best strategy when liquidating a company?

There is just one single key PREPARATION. If you simply prepare yourself before you hand over the control to a liquidator most of the stress can be handled in a way that will work for you not against you. Although this sounds simple there is an enormous amount of regulation and rules in place in this process, always get some advice about this. If you are not sure what you should do and just need some advice simply give us a call on 1300 795 575. Bankruptcy Experts specialises in pre-liquidation strategies.

What if someone else is winding up my company?

No matter whether a liquidator is appointed by the courts or you appoint them voluntarily, there is a lot you need to know and do to protect yourself and your rights. Involve us. It is that simple. Generally you will receive a notice in the mail or a court order. If you have one of these give us a call on 1300 795 575. The longer you ignore this the less options you have.

Can I continue to run a business if I have been the director of a company that has been liquidated?

This is one of the most common questions and the answer is yes. There are laws that need to be adhered to and you need to ensure you structure things the right way before attempting to move forward. Liquidation does not need to be the end of your business life. We can help you through the liquidation process and help you rebuild a new life post liquidation. There are numerous options available, but often people are simply unaware of what they are. We take the time to explain the options available to you as well as helping you achieve your goals.

What do I need to do?

Be prepared and seek the right advice. Remember:

  • 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 idea what they are recommending to you

Many people wrongly believe if you want to start again you need to get rid of the company through a liquidator. The assumption they make is that if you pay for a liquidator then they will work for you.

THIS IS NOT THE CASE! WE WORK FOR YOU - No one else. You are our client and we are only interested in getting the best possible outcome for you.

What do we do?

We help you work through your options. We then help you take the appropriate 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 required.

What if I have a tax debt?

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 fast! Sometimes communication is all that's needed, 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 ATO?

If you have received one of these notices DO NOT LET THEM EXPIRE. Call us as soon as you receive the notice so we can help you work through the options available. As soon as we have assessed the financial state of your business we will propose an action plan for you to consider. Then it is your choice whether you proceed. Call us for a free consultation today 1300 795 575. Remember we work to obtain the best and most favourable outcome for you - not the creditors.

ATO - Director's Penalty Notice

Directors Beware

It is vitally important every company director is aware of the recent changes introduced by the Australian Taxation Office and the extra legal obligations imposed on them and how they will impact you and your business. If you have a PAYG tax debt then you may be served with a Director Penalty Notice by the ATO.

What does it mean if I have a Director's Penalty Notice?

The aim of a Director Penalty Notice is to make directors liable for their company's unpaid tax debt. As a director, you will no longer be able to avoid personal liability for a PAYG tax debt, which comes with a Director Penalty Notice, if the following applies:

  1. Your debt is older than three months and or your debt was not reported to the ATO within three months of the lodgement date.
  2. As a director, you may also by liable for your company's unpaid superannuation liability when you receive a penalty.
  3. Directors, and associates of directors, may now also be liable for a new personal income tax liability. This will make directors and their associates potentially liable for a company's unpaid PAYG withholding liability.

Do I have any options?

Yes. If your business has a tax debt or you have received a Director Penalty Notice it is vital that you seek professional advice. We have various options you may wish to consider. Simply call us on 1300 795 575.

What if I ignore the notice?

There can be significant consequences for not complying with the ATO's notice. This can include losing personal assets such as cars, property or shares and personal bankruptcy for the company's debts.

Statutory Demands

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 courts. A Statutory Demand requires that the debtor company pay a specified sum of money within 21 days from the date of the delivery of the demand.

If the debt is disputed or there are irregularities in the document, the company should immediately seek independent legal advice and apply to the courts to set the demand aside on the basis that the debt, the subject of the Statutory Demand, is genuinely disputed. 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 is able 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 not able 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 can be delivered in person or simply turn up in the mail as registered post.

Wind-up Action

What is a Wind-Up Notice?

A wind-up notice normally 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 duty is to turn the assets into cash and distribute the cash in the order set out in the Corporations Act. In other words this notice is essentially a letter telling 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 relation to their costs as do certain employee entitlements. The balance is distributed equally between unsecured creditors.

Will I be personally liable for my company's 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 anytime so it's best to act promptly.

What happens if I cannot 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 appoint a liquidator who then assumes full control of your company, all of the customers, bank accounts, assets, cash, money that's owed to the company and your premises is no longer yours. Put simply it's over. The business you have built over the years is no longer yours. All of the assets will be sold, your office, shop of factory will be taken over by the liquidator (they will even change the locks) you're services are no longer required. Every aspect of your business will now be under the management of the liquidator.

Do I have any options prior to the liquidators taking over my business?

Yes. We offer a free initial consultation to help you work through this issue. Our team of specialists can spare you enormous heartache. However, you must act quickly to ensure you have the most options! Calling us the day before the liquidator turns up is pointless. Call us today on 1300 795 575.

Do I have any options once the liquidators have arrived?

No. The company is no longer in your control.

Australia's #1 Choice for Bankruptcy Solutions

1300 795 575

  • Liquidators, Liquidators Sydney, Voluntary Liquidation, Business Bankruptcy, liquidation
  • Liquidators, Liquidators Sydney, Voluntary Liquidation, Business Bankruptcy, liquidation
  • Liquidators, Liquidators Sydney, Voluntary Liquidation, Business Bankruptcy, liquidation
  • Liquidators, Liquidators Sydney, Voluntary Liquidation, Business Bankruptcy, liquidation
  • Liquidators, Liquidators Sydney, Voluntary Liquidation, Business Bankruptcy, liquidation

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