Any experienced accountant will tell you that the vast majority of new businesses that try their hand in the Australian economy, end up closing down within 2 years. It is difficult to carve a niche for yourself in today’s global economy and before, you were only competing with the other businesses in the high street. Now, you are competing with the whole world and it is getting smaller all the time. The internet was the game changer and now you have competition from companies in India who can provide what you provide at a fraction of the cost. It is difficulties like this, that makes businesses go under with far reaching consequences.
Nobody wants to go out of business, but if it happens to you, you can take some steps to protect yourself and your assets so that you are not left broke and poorer than you were when you first began. There are specialist insolvency experts out there who can direct you to do a voluntary liquidation of your business and believe it or not, this not only helps you, but it also helps others as well. The people who have worked hard with you can more protection and you get to avoid lengthy court processes which will free up the court system as well.
Voluntary liquidation is never the ideal way to go for a business, but it is essential if you are to protect yourself and to minimise the losses to your outstanding creditors. Here are some of the benefits of creditors voluntary liquidation for an insolvent company like yours.
- It can be very stressful knowing that you as the director are unable to pay your existing debts and there is no way to turn your company around to profitability. If you are insolvent, then you can’t continue to keep trading and so this is the best way to deal with your issues that maximises the returns for your creditors. As long as you have not given any personal guarantees that you will address company debts, you are not liable to repay any money owed by the business.
- If any creditors are currently taking legal action against you, then these will cease the moment you declare that the company is in liquidation. As long as you have taken steps before to ensure that you have no personal liability for the company’s debt, then creditors can no longer take any legal action against you.
- The good thing is that your staff may be able to claim redundancy. If they are eligible, they can start to begin the procedures for claiming redundancy payments and other statutory entitlements due to them under Australian employment law. When company assets are sold, the money will be recovered from this. If there isn’t enough money, then government funds will be used to settle the balance.
You need to protect yourself when the business goes south and voluntary liquidation will help with this.