Business debt can occur very easily. A few slow months and all of a sudden the debt is significantly beyond the reach of the company owner. If you have company debts that are out of reach then give us a call. At Bankruptcy Experts Wyong we are company debt professionals. For a complimentary consultation contact 1300 795 575.
If my business is in distress should I contact a liquidator?
Usually when a business owner finds him or herself in a challenging financial position they are advised by either their bookkeeper, their solicitor or even their colleagues to contact a liquidator and place the company into liquidation. Be very careful about this, as the belief is that because you are paying the liquidator they will look after 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 duty, 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 instant you really feel they will care for your best interests, you are regrettably mistaken.
Once you have signed those papers to appoint the liquidator to your company, 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 demise of your own business.
One Business Owner’s Story …
I knew I was in hot water when the bank wouldn’t lend me any more against the farm. This house 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 solicitor, and they both recommended 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 options. 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 looked after. WRONG!
I found some liquidators. They seemed nice and knowledgeable and they said they would help me as much as they could to work through my financial problems. I had no idea what was about to happen. They seemed to understand my predicament; 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 every single thing; it was all gone. The next day my savings account were frozen and what I thought was going to be a helpful situation turned out to be my worst nightmare. I lost the lot!
What is the best strategy if my business is in trouble?
There is a key to dealing with this situation: PREPARATION. There is a lot you can do to prepare yourself before you relinquish the control of your business to a liquidator. In fact, much of the worry can be taken care of in a way that will work for you, not against you. This sounds easy but in fact there is an extensive amount of regulation and many rules in place surrounding this procedure, so always get some guidance about this. If you are not sure what you should do and just need some advice, just give us a call on 1300 795 575. Bankruptcy Experts Wyong specialises in pre-liquidation strategies.
What if someone else is winding up my company?
If someone is winding up your company like the ATO or a creditor, they will have a liquidator appointed by the courts. You do have some options here, and there is plenty you must know and do to protect yourself. The key here is to get some advice, and involve us as soon as you can in this process. It is that simple. Usually 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 common questions we are asked. Of course there are laws 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 reconstruct a new life after liquidation. There are choices, but in most cases people simply don’t know what they are. At Bankruptcy Experts Wyong we can clarify your choices and help you accomplish 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 recommending to you. They’ve probably 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 Wyong we help you work through your alternatives. 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 an ATO 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 fast! Sometimes communication is all that’s required, sometimes winding up the company is the answer and sometimes negotiation is required. No matter what 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 Tax Office ?
If you have received one of these notices YOU MUST NOT ALLOW THEM LAPSE. Phone us as quickly as you get them and we can help you work through the processes available to obtain the very best and most favorable result for you. Once we have done an assessment of the business and the circumstance we propose an action plan, then it is your choice whether you progress from there. Phone Bankruptcy Experts Wyong for a free consultation today at 1300 795 575.
ATO – DIRECTOR’S PENALTY NOTICE
What is vitally 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 ATO.
What does it mean if I have a Director’s Penalty Notice?
The aim 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 capacity 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 3 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 potentially liable for a company’s unpaid PAYG withholding liability.
Do I have any choices?
Yes. If your company has a tax debt or you have received a Director Penalty Notice, it is crucial that you secure expert guidance, as we have several options you may want to consider. Simply call us on 1300 795 575.
What if I disregard the notice?
There can be considerable consequences for not abiding by the ATO’s notice; this can include losing personal assets like cars, real estate or shares, and personal bankruptcy for the company’s debts. Simply puts, 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 doubted or if there are deviations in the document, the company should immediately secure independent legal advice and apply to the Court to set the demand aside on the grounds that the debt, then the subject of the Statutory Demand is absolutely 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 not able to pay its debts as and when they are 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 might be delivered in person or simply turn up in the mail as registered post.
WINDING UP NOTICE.
What is a Wind-Up Notice?
A wind-up notice regularly follows a Statutory Demand. If a business is not able 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 distribute the cash in the order set out in the Corporations Act. In short, this notice is essentially a letter telling you that on a set date a liquidator will be appointed by the courts to take over 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 regard to their costs as do certain employee entitlements. The balance is distributed equally between unsecured creditors.
Will I be personally liable 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 tax office can issue a Director’s Penalty Notice at any time, so it’s best to act immediately. For a free consultation call 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 control of your company. All of the clients, cheque accounts, assets, cash, money that’s owed to the company and your shop are no longer yours. Put simply, it’s over. The business you have built for many years is no longer yours. All of the assets will be sold, your office, shop or factory will be taken over by the liquidator (they will even re-key the locks) and your services are no longer called for. Every aspect of your company will now be under the administration of the liquidator.
Do I have any options prior to the liquidators taking over my company?
Yes. We offer a free initial consultation to guide you work through this issue. Our team of professionals can spare you massive agony. You must act immediately! Calling us the day before the liquidator shows up is fruitless. Contact Bankruptcy Experts Wyong 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.