COMPANY LIQUIDATION SERVICES

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

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

The cost of a liquidation depends on how the company is wound up. An insolvent company may take one of two ways:

• 1: A company’s shareholders can agree to select and appoint a liquidator of their choosing; Or
• 2: 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 must act as an external administrator for the winding up.

The liquidation process is as follows:

Commencement

• Liquidation Appointment Documents – Director and Shareholders sign and a Registered Liquidator is appointed
• The liquidator lodges documents with the Australian Securities and Investments Commission to commence the liquidation.
• The Liquidator issues letters to all company stakeholders informing them of the appointment.
• The Director fills in and returns a Report on Company Activities and Property and delivers all books and records.

Work Required

• The Liquidator issues an Initial Report to Creditors within 10 business days after the date of their appointment as a Liquidator.
• The Liquidator issues a Statutory Report to Creditors within three months after the date of their appointment as a Liquidator.
• The Liquidator lodges returns with the Australian Taxation Office for transactions entered into by the company.
• The Liquidator realises all available assets of the company.
• The Liquidator undertakes investigations into the affairs of the company.
• The Liquidator lodges a Report under Section 533 of the Corporations Act 2001 with the Australian Securities and Investments Commission

Finalising

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

In short, yes a Director can become personally liable for a Directors Penalty Notice. A DPN regards 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 the liquidation process can affect a director is via their credit history. While the process for a bankrupt business differs 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.

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

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