Read about some of the Frequently Asked Questions regarding insolvency and company liquidation
so that you can familiarise yourself with some of the terms and processes that are involved in this matter.
Bankruptcy is filed when the debtor whose insolvent declares that s/he will surrender assets to exchange it for relief from some of his debts. An individual can enter bankruptcy in two ways:
The best thing to do is to seek professional help as soon as you can. Chat with the My Debt Relief team about the current situation of your company so that you’ll be able to plan ahead around what may happen.
Australian Taxation Office (ATO) can use what we call as Director Penalty Notice (DPN). to make the director of a company personally liable for any unpaid tax debts. These two types of tax are Pay-As-You-Go (PAYG) tax and Superannuation Guarantee Charge (SGC).
There are two types of DPN:
It is common for company directors to try restructuring their company when the company has high chances to face insolvency. More often than not, this creates more negative outcomes for the debtor. Thus, it is recommended that when the company is facing some signs that may lead to insolvency, the director should seek for professional advice as early as possible so the results will be beneficial for the company in the long run. Keep in mind that laws regarding this matter are constantly changing, thus one should be careful when taking actons without the guidance from a professional Insolvency Practitioner.
Under the Corporations Act, a creditor of a company whose debt exceeds $2,000 may serve upon the company a notice under Section 459E requiring the company to pay, or make satisfactory arrangements for payment of the debt within 21 days of service of the notice. Failing to do so might lead to losing your company.
A formal insolvency procedure in signalling that the company has ended, the remaining assets of an insolvent company will be liquidated and shall be distributed to pay the creditors.
Personal Guarantees can typically be required where leases and trade accounts are involved especially to new and small businesses. This is the creditor’s guarantee that the debt will be paid one way or another.
Should you have given any personal guarantees and your business might be facing a financial crisis, seek advice from professionals as you might be faced with personal debts from that of the company if the situation worsens. We are also putting our best efforts when working with directors that might find themselves in this difficult situation.
The business industry is an ever-growing and ever-changing field thus what you have today might not be yours tomorrow. Thus, it’s important to work closely with professionals who will give you an upfront, strategic and sound advice regarding the status of your company.
It depends whether you're the sole owner of the business, if so then Yes your credit file will be flagged. However, if you're a director of a company it's sometimes not tied up to your personal account unless you receive a DPN making you liable for the debt of your company.