Business debt can occur very easily. A few slow months and all of a sudden the debt is significantly beyond the reach of the business owner. If you have business debts that are out of control then give us a phone call. At Bankruptcy Experts Emerald we are business debt professionals. For an absolutely free consultation contact 1300 795 575.
If my company is in distress should I call a liquidator?
Usually when a business owner finds him or herself in an unfeasible financial position they are counselled 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 help you to get back on your feet. BUT THIS IS NOT ALWAYS 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 company to pay off these creditors. That’s it. If for one second you believe they will look after your best interests, you are regrettably mistaken.
Once you have signed those documents to appoint the liquidator to your business, 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 business.
One Business Owner’s Story …
I knew I was in strife when the credit union wouldn’t lend me any more against the home. This house has been in the family for ages and the thought of losing it was 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 substantial 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 taken care of. 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 problems. 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 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 single thing; it was all gone. The next day my bank accounts were frozen and what I thought was going to be a helpful situation turned out to be my worst headache. I lost everything!
What is the best plan of action if my business is in difficulty?
There is a key to dealing with this process: PREPARATION. There is plenty you can do to ready yourself before you hand over the control of your company to a liquidator. In fact, most of the stress and anxiety can be handled 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 uncertain what you should do and just need some advice, just give us a call on 1300 795 575. Bankruptcy Experts Emerald specialises in pre-liquidation strategies.
What if someone else is winding up my company?
If someone is winding up your business 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 guidance, 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 brush off 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 typical questions we are asked. Of course there are regulations 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 choices, but in most cases people simply don’t know what they are. At Bankruptcy Experts Emerald we can clarify your alternatives 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 advising 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 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 securing the result you want. For a free consultation call 1300 795 575.
What do we do?
At Bankruptcy Experts Emerald we help you work through your alternatives. We then help you take the correct 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 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 fast! Sometimes communicating 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 whole way.
What If I have received a notice from the Australian Tax Office ?
If you have received one of these notices YOU MUST NOT LET THEM LAPSE. Get in touch with us as soon as you receive them and we can help you work through the processes readily available to get the most effective and optimal result for you. Once we have done an analysis of the business and the circumstance we propose an action plan, then it is your decision whether you progress from there. Phone Bankruptcy Experts Emerald for a free consultation today at 1300 795 575.
ATO – DIRECTOR’S PENALTY NOTICE
Directors Be Warned
What is vitally important is that every director 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 intention 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 tax debt, which includes 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 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 essentially liable for a company’s unpaid PAYG withholding liability.
Do I have any options?
Yes. If your business has an ATO debt or you have received a Director Penalty Notice, it is necessary that you ask for expert guidance, as we have a variety of options you may want to think about. Simply call us on 1300 795 575.
What if I overlook the notice?
There could be important consequences for not abiding by the tax office’s notice; this can include losing personal assets like vehicles, real estate or shares, and personal bankruptcy for the company’s debts. In other words, the ATO 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 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 genuinely 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 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. 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 might 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 ordinarily 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 duty 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 informing you that on a specific 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 connection with their expenses as do specific employee entitlements. The rest is distributed equally between unsecured creditors.
Will I be personally liable 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 serve a Director’s Penalty Notice any time, so it’s wise to act promptly. 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 business. All of the customers, bank accounts, assets, cash, money that’s owed to the company and your premises are no longer yours. Simply put, it’s over. The company you have built over the 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 change the locks) and your services are no longer required. Every facet of your company will now be under the control of the liquidator.
Do I have any options prior to the liquidators seizing my business?
Yes. We offer a free initial consultation to help you work through this problem. Our team of practitioners can save you enormous distress. You must act immediately! Calling us the day before the liquidator turns up is fruitless. Call Bankruptcy Experts Emerald today on 1300 795 575.
Do I have any alternatives once the liquidators have arrived?
No. The company is no longer in your control.