A liquidator is a person appointed, in the winding up of a corporation, to assume control of the company’s affairs and to discharge its liabilities in preparation for its dissolution. The appointment of a liquidator may be done voluntarily (by the proprietors) or via the courts (usually upon the application of a creditor – very often the ATO using a creditors statutory demand).
The process of the liquidator conducting the affairs of the company and realising its assets is called liquidation.
The liquidator’s role is to ascertain the liabilities (and assets) of the company, convert its assets into money, terminate its contracts, dispose of its business, distribute the net assets to creditors and any surplus (which is rare) to the shareholders and/or proprietors.
The liquidator will extinguish the company, lawfully, as a corporation on the records of ASIC by formal dissolution.
In determining the assets of a company, it is the liquidator’s duty to determine whether particular assets under the company’s control are owned by the company or others – i.e. stock may be purchased subject to a retention of title, vehicles may be on a corporate hire purchase and secured via a PPSR.
BAP can assist company directors to structure their assets and affairs, if not insolvent, in such a fashion to provide lawful asset protection. To discuss how we can help to structure your company’s affairs and assets to provide maximum asset protection, please click here to book an appointment, call 1300-327123 (1300-DCP123), or complete the below form.
Insolvency in general terms, as it relates to a corporation, is the inability to pay debts as and when they become payable.
A company is also insolvent if it is experiencing an ‘endemic shortage of working capital’ as opposed to a temporary lack of liquidity.
Determining the difference at a point in time during the corporation’s life is a question for a court to determine .
Indicators of insolvency include:
- continuing losses,
- no access to alternative finance,
- the inability to raise further equity,
- special arrangements with selected creditors,
- solicitors’ letters or judgments issued against the company,
- overdue taxes,
- failure to keep books and records, etc.
The list is indicative and not exhaustive.
Companies experiencing any or all the above indicators should book a free consultation by clicking here then where we’ll provide you with company specific advice re insolvency in your instance. Alternatively call us on 1300-327123 (till late) or complete the form below.
There are a number of healthy things a company can do in the conduct of its affairs. Some obvious, some not so obvious.
Below is a short checklist of good practice suggestions (in no particular order).
- Not incur debts in the first instance.
- Checking invoices and ATO tax office statements carefully – ensuring there are no additional, unapproved items. Particularly in relation to taxation matters, it is critical that you check these thoroughly!
- Disputing unapproved items quickly. Ideally in writing. Particularly concerning alleged taxation debts, directors tend to do the opposite. And, a director under pressure already, often fails to fully read a tax notice of assessment. (Sometimes they are just plain depressing). A director must resist the urge to bury the document and should immediately dispute any tax ruling or assessment that they believe is incorrect. Failing to dispute assessments can have huge consequences later when and if a creditor’s statutory demand has been issued – options become vastly more limited.
- Putting everything in writing. i.e. using email particularly when entering contractual arrangements. This can provide an important record of the exact agreement.
- Confirming discussions in writing by email after discussing things with the other party. i.e. if one side has made concessions about the debt, the time when due or payable or similar, send an email immediately afterwards confirming what was discussed. It’s much easier to remember at the time than 2 months later.
- Keeping documents and records. Ideally electronically in an inbox.
- Backing up and saving documents and records. There are many good free or low-cost cloud solutions for storing emails and documents.
If your company needs help arranging its file, contract and legal documentation, or if your company needs to dispute a tax notice of assessment or director’s penalty notice call us for a free consultation, call 1300-327123 or complete the form below.
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