Business debt can come up very easily. A few slow months and all of a sudden the debt is far beyond the reach of the company owner. If you have business debts that are out of reach then give us a call. At Bankruptcy Experts Mount Isa we are company debt specialists. For an absolutely free consultation call 1300 795 575.
If my company is in trouble should I phone a liquidator?
Commonly when a business owner finds him or herself in an unfeasible financial position they are instructed by either their financial advisor, their lawyer or even their good friends to call a liquidator and put the company into liquidation. Be careful about this, as the belief is that because you are paying the liquidator they will protect your best interests and help you to get back on your feet. BUT THIS IS CERTAINLY NOT THE CASE!
Liquidators are not on your side …
Although liquidators, administrators and receivers are usually good people, their function, 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 minute you really feel they will care for your best interests, you are regrettably misguided.
Once you have signed those papers to appoint the liquidator to your business, that is it! You no longer have any control 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 business.
One Business Owner’s Story …
I knew I was in trouble when the credit union wouldn’t lend me any more against the house. This business has been in the family for many years and the thought of losing it was way too much. I called my financial advisor and my bookkeeper, and they both advised me to get a liquidator. They said that’s the only way out. I knew I had enormous debt, but it just seemed like I had no choices. My bookkeeper 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 nice and capable and they said they would help me as much as they could to work through my money issues. I had no idea what was about to happen. They seemed to comprehend my situation; I had some cash coming in and a sale of some equipment going through.
The minute I signed the documents 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 savings account were frozen and what I thought was going to be a beneficial situation turned out to be my worst headache. I lost the lot!
What is the best approach if my business is in trouble?
There is a solution to dealing with this process: PREPARATION. There is quite a lot you can do to ready yourself before you relinquish the control of your business to a liquidator. In fact, much of the stress can be taken care of in a way that will work for you, not against you. This sounds basic but in fact there is a huge 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 guidance, just give us a call on 1300 795 575. Bankruptcy Experts Mount Isa 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 options here, and there is lots you must know and do to protect yourself. The key here is to get some guidance, and include us as soon as you can in this process. It is that simple. Generally 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 pay no attention to 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 typical questions we are asked. Of course there are regulations 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 rebuild a new life after liquidation. There are alternatives, but in most cases people simply don’t know what they are. At Bankruptcy Experts Mount Isa we can explain 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 thought what they are advising 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. Understand, 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 outcome you want. For a free consultation call 1300 795 575.
What do we do?
At Bankruptcy Experts Mount Isa we help you work through your alternatives. We then help you take the most suitable action. Then we work toward getting 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 a tax 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 now! Sometimes communicating 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 entire way.
What If I have received a notice from the ATO ?
If you have received one of these notices YOU MUST NOT PERMIT THEM LAPSE. Contact us as soon as you receive them and we will assist you work through the processes readily available to secure the most ideal and optimal outcome for you. Once we have done an evaluation of the company and the circumstance we propose an action plan, then it is your decision whether you progress from there. Phone Bankruptcy Experts Mount Isa for a free consultation today at 1300 795 575.
ATO – DIRECTOR’S PENALTY NOTICE
What is extremely important is that every business owner understands these changes and the serious nature of them and how they will impact you and your business. If you have an ATO debt then you may be issued with a Director Penalty Notice by the ATO.
What does it mean if I have a Director’s Penalty Notice?
The objective of a Director Penalty Notice is to make directors personally 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:.
- Your debt is older than three months and or your debt was not reported to the ATO within 3 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 business has an ATO debt or you have received a Director Penalty Notice, it is important that you secure expert advice, as we have several options you may wish to think of. Simply call us on 1300 795 575.
What if I disregard the notice?
There may be considerable consequences for not adhering to the ATO’s notice; this can include losing personal assets such as cars, 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 requires 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 challenged or if there are abnormalities in the document, the company should immediately look for 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 genuinely contested. 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. Then, 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 may be delivered face to face or simply appear in the mail as registered post.
WINDING UP NOTICE.
What is a Wind-Up Notice?
A wind-up notice typically follows a Statutory Demand. If a business is unable to pay its debts then the Court has the power to wind it up and appoint a liquidator whose task 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 set date a liquidator will be appointed by the courts to take control of your company if you can’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 expenses as do certain employee entitlements. The balance is distributed equally between unsecured creditors.
Will I be personally accountable for my company’s debt?
No. The liquidation of a company does not automatically suggest the director will be made bankrupt; however, the process of winding up a company resembles the process of having a person declared bankrupt. Having said that, the Australian Tax Office can serve a Director’s Penalty Notice at any time, so it’s wise to act immediately. For a free consultation contact 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 assign a liquidator who then assumes full command of your company. All of the customers, bank accounts, assets, cash, money that’s owed to the business and your properties are no longer yours. In other words, 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 or factory will be taken control of by the liquidator (they will even change the locks) and your services are no longer needed. Every area of your business will now be under the administration of the liquidator.
Do I have any options preceding the liquidators seizing my company?
Yes. We offer a free initial consultation to help you work through this problem. Our team of practitioners can spare you massive misery. You must act immediately! Calling us the day before the liquidator turns up is meaningless. Call Bankruptcy Experts Mount Isa today on 1300 795 575.
Do I have any options once the liquidators have shown up?
No. The company is no longer in your control.