This occurs when a creditor has first issued a Creditors’ Statutory Demand. Under other circumstances, a liquidation can be imposed from outside the company by order of a court (called a “court liquidation”). There are different types of liquidation for these circumstances. Relieve a director’s worry and stress by legally bringing the affairs of the old-company to a close.Įven if the company is solvent, the company and its directors may still consider liquidating it for tax benefits.Help protect a director from personal liability for tax debts that might result from a Director Penalty Notice from the ATO – this is a complicated area so check out the page on DPNs.Help protect a director from Insolvent Trading.A director will be facing pressure from employees, shareholders, the bank and creditors. Being a director of an insolvent company is stressful and worrying. Liquidation is often a very good option for a director. Insolvency is not necessarily binary (various things influence whether a company would be considered insolvent or not), but if the company is insolvent and it continues to trade then it and its directors may be at risk of breaching insolvent trading laws which can have personal consequences for the directors. In short, many of the above things could be signs that the company is considered insolvent, which is defined as “being unable to pay debts as they fall due”. Creditors hassling for payment of debts.
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