Business debt can occur very easily. A few quiet months and all of a sudden the debt is a long way 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 Herveybay we are company debt professionals. For an absolutely free consultation call 1300 795 575.
If my business is in distress should I contact a liquidator?
Typically when a company owner finds him or herself in an unworkable financial position they are instructed by either their financial advisor, their lawyer or even their good friends to speak with a liquidator and put the business 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 ABSOLUTELY NOT THE CASE!
Liquidators are not on your side …
Although liquidators, administrators and receivers are usually nice 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 company to pay off these creditors. That’s it. If for one second you believe they will look after your best interests, you are sadly mistaken.
Once you have signed those papers 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 company.
One Business Owner’s Story …
I knew I was in trouble when the bank wouldn’t lend me any more against the business. This house has been in the family for ages and the thought of losing it was way too much. I called my financial advisor and my accountant, and they both encouraged 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 protected. WRONG!
I found some liquidators. They seemed professional and competent 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 appreciate my dilemma; 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 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 everything!
What is the best strategy if my company is in difficulty?
There is a key to addressing this process: PREPARATION. There is plenty you can do to ready yourself before you relinquish the control of your business to a liquidator. In fact, most of the stress and anxiety can be managed 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 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 Herveybay 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 lots you must know and do to protect yourself. The key here is to get some guidance, 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 disregard 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 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 reconstruct a new life after liquidation. There are alternatives, but in most cases people simply don’t know what they are. At Bankruptcy Experts Herveybay we can clarify your alternatives 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 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. 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 Herveybay we help you work through your options. 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 needed.
What if I have an ATO 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 quickly! Sometimes correspondence is all that’s 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 PERMIT THEM EXPIRE. Contact us as soon as you receive them and we will help you work through the options available to secure the best and most favorable outcome for you. Once we have done an analysis of the company and the circumstance we suggest an action plan, then it is your choice whether you progress from there. Contact Bankruptcy Experts Herveybay 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 is aware of 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 ATO.
What does it mean if I have a Director’s Penalty Notice?
The object 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 chance 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 due 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 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 necessary that you get professional guidance, as we have several options you may want to think about. Simply call us on 1300 795 575.
What if I ignore the notice?
There may be substantial consequences for not complying with the tax office’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 disputed or if there are deviations in the document, the company should immediately look for 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 definitely questioned. 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. 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 can be delivered in person or simply appear in the mail as registered mail.
WINDING UP NOTICE.
What is a Wind-Up Notice?
A wind-up notice generally follows a Statutory Demand. If a company 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 short, this notice is effectively a letter telling you that on a particular 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 regard to their costs as do a number of employee entitlements. The rest is distributed equally between unsecured creditors.
Will I be personally obligated 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 Australian Tax Office can serve a Director’s Penalty Notice at any time, so it’s best to act in a timely manner. 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 total command of your business. All of the customers, cheque accounts, assets, cash, money that’s owed to the company 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 control of 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 prior to the liquidators taking control of my business?
Yes. We offer a free initial consultation to help you work through this dilemma. Our team of experts can save you tremendous distress. You must act rapidly! Contacting us the day before the liquidator shows up is meaningless. Phone Bankruptcy Experts Herveybay 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.