A security company approached us seeking liquidation. It had an accumulated tax debt of over $300,000 and trade creditors of approximately $90,000. Its only assets were debtors. One of its largest debtors was placed in liquidation.
Upon our consultants reviewing the position, we advised the Director that the company’s only choice was liquidation and termination. Upon our advice, the Director placed the company in liquidation. The tax office stopped its recovery proceedings, and the trade creditors stopped calling the Director. Our consultants provided their report to the creditors explaining the reasons for the company’s failure, which were mostly outside of the Director’s control. Unfortunately insufficient assets were realised to provide a distribution to the creditors and there was only sufficient funds for the employees. Upon a distribution being made to the employees and ASIC being given clearance for the liquidator to finalise the matter, the company was deregistered.
In the meantime the Director commenced operation of another company, as it was not illegal to do so after the liquidation. He made sure his due diligence on future customers was much more stringent to avoid a similar situation.