As a Director, you speak to our team of Insolvency Practitioners and our Registered Liquidators by ASIC to get expert advice.

Our key members of staff include highly qualified Insolvency Practitioners, as well as Registered Administrators, Liquidators, and Receivers from Hall Chadwick. As specialists in addressing financial issues for companies large and small, we’ll be ready to help you with expert advice.

Our team has helped many companies that are in distress to turn their situation around (or to exit quickly and cleanly). But a good result comes down to taking action about your situation before it’s too late.

The most commonly asked question by company directors and business owners considering company liquidation is “what is the cost of the liquidation process?”

• Well it really depends on how the company is wound up.
• An insolvent company may be wound up in two ways
• First, a company’s shareholders can agree to select and appoint a liquidator of their choosing; Or
• Unpaid creditors may apply to Court to wind up the company

Either way, when a company is insolvent and unable to pay its debts, a registered liquidator is required to act as an external administrator for the purpose of the winding up.

Commencement:

• Liquidation Appointment Documents – Director and Shareholders sign and a Registered Liquidator Appointed
• Liquidator to lodge documents with the Australian Securities and Investments Commission to commence the liquidation.
• Liquidator to issue letters to all stakeholders of a company informing them of the appointment.
• Director to fill in and return a Report on Company Activities and Property and deliver all books and records.

Work Required:

• Liquidator to issue an Initial Report to Creditors within 10 business days after the date of their appointment as a liquidator.
• Liquidator to issue a Statutory Report to Creditors within 3 months after the date of their appointment as a liquidator.
• Liquidator to lodge returns with the Australian Taxation Office for transactions entered into by the company.
• Liquidator to realise all available assets of the company.
• Liquidator to undertake investigations into the affairs of the company.
• Liquidator to lodge a Report under Section 533 of the Corporations Act 2001 with the Australian Securities and Investments

Finalising:

• Liquidator to declare a dividend if there are sufficient funds available.
• Liquidator to obtain clearance from the Australian Securities and Investments Commission to finalise the liquidation.
• Liquidator to issue a Final Report to Creditors, Lodge final tax return with ASIC and write to the director and the Australian
• Taxation Office informing them of the finalisation of the liquidation.

In short, yes a Director can become personally liable for a Directors Penalty Notice. A DPN is in regard to outstanding Pay As You Go or Superannuation Guarantee Charge debts. The ATO can send out a DPN which gives a Director 21 days to take certain actions to avoid personal liability. The 21 day period starts from the date of the DPN notice. So to be clear, it does not run from the date you receive it.

You should seek advice within the 21-day period If you have received a Director Penalty Notice. A failure to do so can result in the ATO pursuing that Director personally for the company tax debt. The ATO has a range of options including a Garnishee Notice against the Directors’ personal bank accounts – ultimately resulting in Bankruptcy.

One way a director can be impacted by the liquidation process is – how it affects their credit history. While the process is different from a personal bankruptcy, which will remain on your credit report for up to five years, as a company director you are able to separate yourself from the organisation to a certain extent.

In the case of a creditors voluntary liquidation this will show up on the records of credit reporting agencies, though it may not necessarily affect your credit.

Each credit provider has lending criteria they use to base their decisions. Credit reporting agencies don’t make decisions or recommendations. Some institutions may also use a rating/score with the file and lending criteria when they are assessing an application.

Your credit rating should not be a hindrance from deciding whether to put your company into liquidation. There can be far more dire consequences if you choose not to do anything.

The simple difference is Voluntary Administration is intended to save or sell a viable business, where Liquidation is designed to close a company with a business that is not viable.

We find it quite common for Directors to enquire about putting their company into Voluntary Administration, when a Liquidation is a better fit.