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 business debts that are out of reach then give us a phone call. At Bankruptcy Experts Northern Rivers we are company debt specialists. For a complimentary consultation phone 1300 795 575.
If my company is in distress should I get in touch with a liquidator?
Usually when a company owner finds him or herself in an unworkable financial position they are encouraged by either their accountant, their lawyer or even their close friends to speak to a liquidator and put the business 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 DEFINITELY NOT THE CASE!
Liquidators are not on your side …
Although liquidators, administrators and receivers are usually nice 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 care for 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 command 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 hot water when the credit union wouldn’t lend me any more against the home. This home has been in the family for ages and the thought of losing it was 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 options. My lawyer said that because I am paying for the liquidator and that it was going to be a voluntary liquidation that I would be protected. 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 financial troubles. 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 nightmare. I lost everything!
What is the best approach if my company is in difficulty?
There is a solution to addressing this situation: PREPARATION. There is quite a lot you can do to ready yourself before you give up the control of your business to a liquidator. In fact, most of the worry can be dealt with in a way that will work for you, not against you. This sounds easy but in fact there is a substantial amount of regulation and many rules in place surrounding this procedure, so always get some guidance about this. If you are unsure what you should do and just need some guidance, just give us a call on 1300 795 575. Bankruptcy Experts Northern Rivers 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 alternatives here, and there is lots 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. 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 ignore this the less 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 activity, as so many people think it is. We can help you do this and rebuild a new life after liquidation. There are choices, but in most cases people simply don’t know what they are. At Bankruptcy Experts Northern Rivers we can discuss 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 recommending 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 obtaining the result you want. For a free consultation call 1300 795 575.
What do we do?
At Bankruptcy Experts Northern Rivers we help you work through your alternatives. We then help you take the appropriate 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 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 quickly! Sometimes correspondence is all that’s really needed, sometimes winding up the company is the answer and sometimes negotiation is required. What ever 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 EXPIRE. Call us as early as you get them and we can help you work through the processes available to get the very best and optimal result for you. Once we have done an evaluation of the business and the situation we recommend an action plan, then it is your choice whether you progress from there. Phone Bankruptcy Experts Northern Rivers for a free consultation today at 1300 795 575.
ATO – DIRECTOR’S PENALTY NOTICE
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 company. If you have an ATO 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 objective of a Director Penalty Notice is to make directors accountable for their company’s unpaid tax debt. As a director, you will no longer have the ability to avoid personal liability for a PAYG ATO 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 due 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 options?
Yes. If your company has a tax debt or you have received a Director Penalty Notice, it is imperative that you look for professional guidance, as we have several options you may wish to think about. Simply call us on 1300 795 575.
What if I overlook the notice?
There might be significant consequences for not complying with the ATO’s notice; this can include losing personal assets like cars, property 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 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 questioned or if there are oddities 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 challenged. 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 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. 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 could be delivered face to face or simply show up in the mail as registered mail.
WINDING UP NOTICE.
What is a Wind-Up Notice?
A wind-up notice normally 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 distribute the cash in the order set out in the Corporations Act. In other words, this notice is effectively 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 relation to their expenses as do particular employee entitlements. The balance 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 suggest 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 serve a Director’s Penalty Notice any time, so it’s wise to act quickly. 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 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 properties are 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 business, shop or factory will be taken control of by the liquidator (they will even change the locks) and your services are no longer called for. Every area of your business will now be under the administration of the liquidator.
Do I have any options before the liquidators seizing my business?
Yes. We offer a free initial consultation to guide you work through this problem. Our team of professionals can save you massive distress. You must act immediately! Contacting us the day before the liquidator shows up is fruitless. Call Bankruptcy Experts Northern Rivers today on 1300 795 575.
Do I have any alternatives once the liquidators have shown up?
No. The company is no longer in your control.