AUSTRALIA
Questions
Liquidation
How long does it take before my company enters into liquidation? Every one of our clients are different, there are no two companies identical in character, and so our process is different for everyone. However, we give each new matter an initial timeframe of four working weeks. This can be extended or shortened depending on the client and their requirements.
What is an illegal phoenix company? Phoenix Companies are used to transfer assets illegally and to avoid paying creditors. If a sale of assets is not carried out correctly – and legally – then the directors could have problems in the future with a liquidator, ASIC and the ATO.
Am I personally liable for the debt of the company? In most cases the answer would be no. However, you will need to be aware of all debts that you may have personally guaranteed. This may include some creditors, loans, overdrafts and in some cases PAYG and Super. We will help you work out what the liability, if any, is tied back to your personally.
What do I tell people when they call demanding money from me? Once a company enters into liquidation, the ownership of that business and its affairs fall to the liquidator. Unless you have personally guarantees with your creditors, you can direct all correspondence to the liquidator.
Do I need to pay for the assets of my own company? Yes. If you intend on using the assets of a company that is about to enter liquidation you must purchase them for a fair price and sale agreement. If you do not then you may be participating in illegal phoenix activities.
How much does this all cost? Again, no two business are the same and this would show in the work that needs to be undertaken for us to successfully work with them. However, a tailored business solution document will be provided for you which will include in it a measured project cost.
Can I use the same business name? Yes of course, provided it is purchased out of the company that is about to enter liquidation.
Can I still be a Director of another company? Yes. There is no automatic prohibition on a director of a company that enters liquidation holding another, or many other, directorships. However, the Corporations Act gives ASIC the power to ban someone from being a director for a period of up to five years if they have been a director of two or more companies that entered liquidation within the last seven years
Does this affect my personal credit rating? Yes, this will be recorded on your credit file, but not as a severe record. Credit Reporting Agencies keep track of companies that enter liquidation (for insolvent companies) and the names of the directors of those companies. However, a liquidation is not a bankruptcy. Or even a personal judgement. A company is a separate legal entity to a director and the company’s directors are not automatically liable for a company’s debts. A personal bankruptcy or a personal judgement is a serious black mark on your credit rating – being a director of a company that went into liquidation is a less serious mark.
How long is the actual liquidation process? The liquidation process of a company really does not have any time limit. There is a whole list of elements that a liquidator and their team can take into consideration. Part of our service to our clients to work with the liquidator and their team on your behalf, allowing you to get on with your life.