As the Director – Am I Going to Lose My Home if I Liquidate the Company?
Liability and Liquidation
The most common question we are asked when clients contact us for advice is:
"Will I lose my home if I liquidate the business?"
The short answer is NO.
Company liquidation is by definition about your company and not your personal assets. As the director, you are protected by company law and have limited liability for its debts.
For all UNSECURED company debt, this should not affect your personal assets subject to some considerations.
When Does Personal Liability Apply?
There are special circumstances when personal liability does apply. They are outline below:
Does the company have a secured loan with a financial institution such as a bank? If so, is that loan secured by you or any of your personal assets, such as your home?
In the event where your personal assets have been used as security, they could be used to pay off any outstanding company debts.
Have you signed any personal guarantees or director guarantees? These can be with respect to suppliers or to obtain a lease and you will be personally liable for this debt.
What is the current status with the ATO?
If you have been issued with a Director Penalty Notice there may be some personal liability. In addition, any outstanding Pay As You Go Tax or super contributions should be dealt with according
Trading insolvent is illegal and you could be personally liable if you recklessly incurred unpaid debt with your creditors while being fully aware that the company was in a position where it could not afford to continue trading.
You need to fully understand these major 4 things prior to liquidating a business.
Get Free Expert Advice Now
For those experiencing financial difficulties, the first step is to discuss your situation with a qualified expert. Professional advice will help you make the right decisions moving forward and put you in a position to regain financial control.
The key when facing financial hardship is to act quickly and get expert advice.
Contact Us or call now on 1300 789 499.
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