Why bother to Liquidate the company at all?
Sometimes a company will be in the situation where it has ceased to trade and has no assets and we are asked by a director whether they should bother to liquidate the company.
After all, is it not an option for the director to do nothing and let a creditor pay to have the Court order the winding-up of the company rather than the director paying for a Creditors Voluntary Liquidation?
We say that’s a bad approach for the following reasons:
- Problems with the ATO – A director runs the risk that the ATO will one day serve a Director Penalty Notice on the company and the directors which can make the directors personally liable for the company’s debt to the ATO. If a director abandons the company but doesn’t liquidate the company then there is a significant risk that Legal Notices and the Director Penalty Notice will not be received by a Director – the unfortunate effect is that the director becomes personally liable for the ATO debt.
- Problems with other creditors – When a company simply ceases to trade and there are outstanding creditors, then those creditors will continue to pursue the company for payment. Sometimes that will be by way of Legal Notices and sometimes a continual stream of irate phone calls from creditors. The only effective way to stop the hassles is to put the company into liquidation and thereafter creditors are dealt with by the liquidator, not the directors.
If you are being hassled by creditors or are concerned about receiving a Directors Penalty Notice then CALL US NOW to receive CONFIDENTIAL FREE ADVICE on your options.
If you would like to learn more about Liquidation, please access our full Liquidation guide created by Insolvency Solutions Group’s specialists explaining this in detail.