Business debt can come up very easily. A few quiet months and all of a sudden the debt is a long way beyond the reach of the business owner. If you have company debts that are out of reach then give us a phone call. At Bankruptcy Experts Rockhampton we are business debt professionals. For a free consultation call 1300 795 575.
If my company is in difficulty should I get in touch with a liquidator?
Often when a company owner finds him or herself in an unworkable financial position they are encouraged by either their financial advisor, their solicitor or even their close friends to contact a liquidator and put the business into liquidation. Be cautious about this, as the belief is that because you are paying the liquidator they will care for your best interests and assist you to get back on your feet. BUT THIS IS DEFINITELY NOT THE CASE!
Liquidators are not on your side …
Although liquidators, administrators and receivers are usually helpful 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 feel they will look after your best interests, you are regrettably misguided.
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 company.
One Business Owner’s Story …
I knew I was in trouble when the bank wouldn’t lend me any more against the house. This farm has been in the family for many years and the thought of losing it was overwhelming. I called my financial advisor and my accountant, and they both suggested me to get a liquidator. They said that’s the only way out. I knew I had huge debt, but it just seemed like I had no options. 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 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 comprehend my circumstance; I had some cash coming in and a sale of some equipment going through.
The minute I signed the paperwork 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 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 company is in trouble?
There is a key to addressing this situation: PREPARATION. There is quite a lot you can do to prepare yourself before you hand over the control of your business to a liquidator. In fact, most of the worry can be handled in a way that will work for you, not against you. This sounds easy but in fact there is a huge amount of regulation and many rules in place surrounding this procedure, so always get some guidance 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 Rockhampton 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 choices 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. 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 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 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 life, as so many people think it is. We can help you do this and reconstruct a new life after liquidation. There are alternatives, but in most cases people simply don’t know what they are. At Bankruptcy Experts Rockhampton we can discuss 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 suggesting to you. They’ve probably heard that if you want to begin 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 securing the outcome you want. For a free consultation call 1300 795 575.
What do we do?
At Bankruptcy Experts Rockhampton we help you work through your choices. We then help you take the suitable action. Then we work toward securing 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 an ATO Debt?
If you have a tax debt, don’t dismiss 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 correspondence is all that’s needed, 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 LET THEM EXPIRE. Get in touch with us as quickly as you get them and we can help you work through the processes readily available to secure the most effective and optimal outcome for you. Once we have done an evaluation of the company and the situation we recommend an action plan, then it is your decision whether you progress from there. Call Bankruptcy Experts Rockhampton for a free consultation today at 1300 795 575.
ATO – DIRECTOR’S PENALTY NOTICE
Directors Be Warned
What is vitally important is that every business owner understands these changes and the serious nature of them and how they will impact you and your company. If you have a tax 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 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 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 company has a tax debt or you have received a Director Penalty Notice, it is necessary that you find professional advice, as we have a variety of options you may need to consider. Simply call us on 1300 795 575.
What if I pay no attention to the notice?
There may be considerable consequences for not abiding by the ATO’s notice; this can include losing personal assets such as vehicles, property 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 requires 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 contested 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 basis that the debt, then the subject of the Statutory Demand is absolutely 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 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 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 can 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 normally 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 duty 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 ultimately 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 regard to their costs as do specific employee entitlements. The rest is distributed equally between unsecured creditors.
Will I be personally responsible for my company’s debt?
No. The liquidation of a company does not automatically imply 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 Australian Tax Office can issue a Director’s Penalty Notice at any moment, so it’s wise to act in a timely manner. 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 assign a liquidator who then assumes total control of your company. All of the customers, cheque accounts, assets, cash, money that’s owed to the company and your properties are no longer yours. Simply put, it’s over. The business you have built over the years is no longer yours. All of 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 required. Every facet of your business will now be under the management of the liquidator.
Do I have any options preceding the liquidators taking over my company?
Yes. We offer a free initial consultation to help you work through this problem. Our team of specialists can spare you substantial misery. You must act quickly! Calling us the day before the liquidator shows up is senseless. Call Bankruptcy Experts Rockhampton today on 1300 795 575.
Do I have any options once the liquidators have turned up?
No. The company is no longer in your control.