Company debt can happen very easily. A few quiet months and all of a sudden the debt is substantially beyond the reach of the business owner. If you have company debts that are out of control then give us a phone call. At Bankruptcy Experts Wollongong we are business debt professionals. For an absolutely free consultation phone 1300 795 575.
If my business is in distress should I get in touch with a liquidator?
Often when a company owner finds him or herself in an unworkable financial position they are counselled by either their accountant, their lawyer or even their colleagues to speak to a liquidator and put the company into liquidation. Be very careful about this, as the belief is that because you are paying the liquidator they will care for your best interests and help 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 helpful 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 minute you believe they will look after your best interests, you are regrettably misguided.
Once you have signed those documents 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 demise of your own business.
One Business Owner’s Story …
I knew I was in strife when the credit union wouldn’t lend me any more against the business. This farm has been in the family for ages and the thought of losing it was way too much. I called my financial advisor and my solicitor, and they both suggested 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 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 competent and they said they would help me as much as they could to work through my financial troubles. I had no idea what was about to happen. They seemed to appreciate 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 every little thing; it was all gone. The next day my bank accounts 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 trick to handling this process: PREPARATION. There is quite a lot you can do to ready yourself before you hand over the control of your company to a liquidator. In fact, much of the stress and anxiety can be dealt with in a way that will work for you, not against you. This sounds basic but in fact there is a substantial amount of regulation and many rules in place surrounding this process, so always get some advice about this. If you are not sure what you should do and just need some suggestions, just give us a call on 1300 795 575. Bankruptcy Experts Wollongong 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 guidance, and include us as soon as you can in this process. It is that simple. Typically 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 disregard 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 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 options, but in most cases people simply don’t know what they are. At Bankruptcy Experts Wollongong we can clarify your choices 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 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 presumption 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 obtaining the result you want. For a free consultation call 1300 795 575.
What do we do?
At Bankruptcy Experts Wollongong we help you work through your choices. We then help you take the correct action. Then we work toward attaining 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 ignore 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 communication is all that’s really 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 YOU MUST NOT PERMIT THEM EXPIRE. Contact us as soon as you get them and we will assist you work through the procedures available to get the most effective and optimal result for you. Once we have done an evaluation of your business and the situation we propose an action plan, then it is your choice whether you progress from there. Call Bankruptcy Experts Wollongong for a free consultation today at 1300 795 575.
ATO – DIRECTOR’S PENALTY NOTICE
Directors Be Warned
What is critically 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 aim 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 three months of the lodgment date.
- As a director, you may also be liable for your company’s unpaid superannuation liability when you get 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 choices?
Yes. If your company has a tax debt or you have received a Director Penalty Notice, it is crucial that you seek qualified help, as we have a variety of options you may need to look at. Simply call us on 1300 795 575.
What if I ignore the notice?
There could be substantial consequences for not complying with the tax office’s notice; this can include losing personal assets such as cars, real estate or shares, and personal bankruptcy for the company’s debts. Simply puts, the ATO will personally bankrupt you.
What is a Statutory Demand?
A Statutory Demand is a demand created 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 sum of money within 21 days from the date of the delivery of the demand on the Debtor Company.
If the debt is debated or if there are irregularities in the document, the company should immediately find 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 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. 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 face to face or simply appear in the post as registered post.
WINDING UP NOTICE.
What is a Wind-Up Notice?
A wind-up notice ordinarily 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 job it is to turn the assets into cash and disburse the cash in the order set out in the Corporations Act. In other words, this notice is essentially a letter informing you that on a particular 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 costs as do a number of 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 resembles 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 best 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 appoint a liquidator who then assumes full command of your business. All of the clients, bank accounts, assets, cash, money that’s owed to the business and your premises are no longer yours. In other words, it’s over. The business you have built for many years is no longer yours. All the assets will be sold, your business, shop or factory will be taken over by the liquidator (they will even change the locks) and your services are no longer called for. Every facet of your company will now be under the management of the liquidator.
Do I have any options before the liquidators seizing my company?
Yes. We offer a free initial consultation to assist you work through this dilemma. Our team of practitioners can save you enormous heartache. You must act now! Contacting us the day before the liquidator shows up is futile. Get in touch with Bankruptcy Experts Wollongong today on 1300 795 575.
Do I have any choices once the liquidators have turned up?
No. The company is no longer in your control.